(NICOSIA, Cyprus) — Hundreds of students are marching outside the Cypriot Parliament on Tuesday in protest of a bailout plan that was worked out with the European Union to save Cyprus from bankruptcy.
The deal, which was reached on Monday, will provide the island nation with a bailout of approximately $13 billion. It calls for shrinking the banking system; in fact, the Cyprus Popular Bank will be shut down and viable assets will be taken over by the Bank of Cyprus.
To help pay for the bailout, bank depositors with more than 100,000 euros will endure losses, while those under that amount will be protected.
This is the first time that Europe will actually reach into people’s bank accounts in order to pay for a bailout.
Until now, European leaders have insisted that the Cyprus solution is specific and will not be repeated.
But if Europeans in countries other than Cyprus begin to think that their bank deposits could be used for bailouts, there could be a more widespread run on banks.
There could also be further damage if investors in European banks pull back, fearing that they would have to give up their assets in case of a bailout.
Copyright 2013 ABC News Radio
Ahiza Garcia, CNN
Robert Mclean, CNN Newswire