This could be a very bad thing. Some excuses that I read are trying to justify this theft. One such excuse is that the Russian mob is laundering money down there and they a re taking a bigger hit. They think that taking laundered money makes it OK. The bank runs are happening now. This could be the start of the end.
Maybe the only thing stupider than deposit insurance, is deposit seizure. It is my understanding, from the little information provided, that Cypriot banks were insolvent, short of assets, by 17 billion Euros, and the shortfall is being made up 10-7, 10 billion from the “Eurozone ministers” (i.e., German taxpayers) and 7 billion form depositors.
This is hardly a seizure, it is a gift, just a smaller gift than the depositors wanted. If you put your money in an insolvent bank, you should consider yourself lucky to get anything at all.
No thank, I’ll put my money into lotto cards.