Article Summary In What Is Being Called a "Bail-In," the Finance Ministers

question 47

Multiple Choice

Article Summary
In what is being called a "bail-in," the finance ministers of the 17-nation Eurozone agreed to step in to assist the banking system in the nation of Cyprus. With this arrangement, the banks receive an infusion of capital, but depositors are being changed a special bank levy of up to 10% on deposit accounts. Like in the United States, Cyprus does have deposit insurance which guarantees deposits up to a certain level, but the size of the debt owed by the Cypriot banks was so large that agreeing to the special bank levy and ignoring the deposit insurance seemed necessary to get support from the European Union. Some analysts have also stated that the levy may have been needed to prevent bank runs on foreign-owned accounts, which have been estimated to make up one-third of the total deposits in Cypriot banks.
Source: Megan McArdle, "After Cyprus Bank Bailout, Depositors Race to Withdraw Their Cash. Is the Rest of Europe Next?" Daily Beast, March 17, 2013.

-Refer to the Article Summary.In 2013,the European Union agreed to essentially bail out the banks in the nation of Cyprus.In doing this,the EU was,in effect,acting as a

• A)shadow bank.
• B)conductor of open market operations.
• C)private equity firm.
• D)lender of last resort.

---

Definitions:

Mandatory Subjects

These are topics or areas which are required by law, policy, or other regulations to be covered or taught in a specific context, such as education or employment.

Collective Bargaining

The process by which employers and employee representatives negotiate conditions of employment, such as wages, hours, and working conditions.

Chief Negotiator

The principal or lead person responsible for conducting negotiations on behalf of an organization or government.

Just Unionized

Recently formed or recognized as a labor union, often aimed at negotiating better wages, benefits, and working conditions for employees.