Inflicting losses on deposits at Cypriot banks could drive investors across the world to pull their money from banks in other countries, according to Carlyle Group co-chief executive David Rubenstein.
Rubenstein's warning after a raid on deposits over 100,000 euros in Cyprus bank accounts was conducted as part of a European union bailout deal to save Cyprus from bankruptcy. The move, which was unprecedented, had a chilling effect on depositors across the world.
In anticipation of a bank run on Cypriot banks and avoid a flight of euros, the country imposed capital controls. Fortunately, the expected bank run did not happen when the banks reopened.
"If you are in a bank that is not all that strong, in a country that is not all that strong, you might not keep your money there any longer. That's the real impact of Cyprus; it's scaring to death a lot of depositors all around the world," Rubenstein said.
He said the support from the European Central Bank helped ensure that the existence of the euro is not threatened.
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