There's nothing like having part of your savings account confiscated overnight to make you feel that your money isn't safe.
That's what depositors in Cypriot banks awoke to on March 16, when they found their accounts frozen for at least five days to avoid panicked withdrawals. As part of a bailout package for Cyprus, eurozone leaders agreed to impose a one-time tax of 9.9 percent on uninsured deposits in Cypriot banks of €100,000 or more ($129,570) and 6.75 percent on insured deposits of less than €100,000.
The exact size and scope of the levies may yet change. The Parliament of Cyprus voted against the tax Tuesday, putting President Nicos Anastasiades on the spot for coming up with a new proposal. Still, a line has been crossed: Forcing depositors to participate in bailouts is now on the table in troubled eurozone countries. The move would not only ensure that Cyprus' economy will contract sharply, necessitating more bailout money or a debt restructuring in the future; it might also reverse most of the progress eurozone policymakers have made toward ending the euro crisis.