Capital controls have officially come to Europe, specifically in Cyprus.
Having found that it couldn’t confiscate a small amount at all depositors’ savings accounts, Cyprus is now trying to confiscate a larger amount from the “wealthy,” who have savings stored there.
They’ve also implemented capital controls and staged a massive bank holiday to stop people from getting their money out of the country. So much for the concept of personal property, it’s not YOUR savings it’s the BANKS now apparently.
It is now official, the EU has broken up in fact just not yet on paper. Consider that the basic premise of the EU was open borders for people and money and you’ll see what I mean.
As soon as you start talking about limiting these things, you’ve broken up the Union. It hasn’t been passed into law… yet, but it will as soon as this round of the Crisis picks up steam.
Indeed, this time last year, when the EU was on verge of collapse, both France and Germany floated ideas about introducing border controls.
Germany and France's joint proposal to allow Schengen-zone countries to temporarily reintroduce border controls as a means of last resort might sound harmless. But doing so would damage one of the strongest symbols of European unity and perhaps even contribute to the EU's demise.
Germany and France are serious this time. During next week's meeting of European Union interior ministers, the two countries plan to start a discussion about reintroducing national border controls within the Schengen zone. According to the German daily Süddeutsche Zeitung, German Interior Minister Hans-Peter Friedrich and his French counterpart, Claude Guéant, have formulated a letter to their colleagues in which they call for governments to once again be allowed to control their borders as "an ultima ratio" -- that is, measure of last resort -- "and for a limited period of time." They reportedly go on to recommend 30-days for the period.
Granted, the Schengen system is not perfect. With the EU's eastward expansion, its external borders have become more porous. The problem areas are well-known: Greece doesn't sufficiently guard its border with Turkey, and Italy simply allows refugees through to continue their journey into neighboring countries. Doing so violates the Schengen Agreement, which stipulates that immigrants have to be taken care of by the country in which they arrive.
Similar ideas along with capital controls were floated in Greece and Spain, along with capital controls in Switzerland this time last year as well.
Mario Draghi put off the European collapse temporarily by promising unlimited bond buying, but the truth is that the EU has already broken up on one level. Border controls were proposed the last time things got hairy in Europe, it’s only a matter of time before it happens again.
Border controls? Capital Controls? And we’re talking about a union?
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