Run on Banks: It's not about little Cyprus but the way Bailout has changed to Extortion & "No say" Taxation
EU and other governments are basically telling people if we want to do a bailout because banks or a country messed up, we are going to take your money too as tax and additional funds to the bailout, directly from your accounts. Basically we are going to stick our hands into your pockets whether you like it or not and you can't do anything about it. If not no bailout.
This is why in the bigger countries like Italy and Spain who yet have to get EU austerity people are not going to sit tight and leave their money in the banks. They will take the money out before hand because based on Cyprus action they don't trust the EU or their government. Not to mention that Italy still doesn't have a governement.
People don't want to bail out banks and their governments at their own expense. Therefore there could be lots more bank failures. Even if EU backs off and says they will pay for all the bailout money, now the Germans and other more capable residents are going to be angry to have to bailout weaker ones as it is their money being used for austerity since the population of the one being bailed out are not paying..
But to summaraize, this completely changes the game and trust issue with EU and troubled country governments willingness to freeze and stick their hands into hard working people's accounts.
Simple, your money is not safe in any of these banks.
It is not Cyprus nor the size, it is the approach of bailout that has changed. Think of it this way. If you know your country has to be bailed out like Spain and Italy which doesn't even have a government and a $2 trillion Euro debt but also know that as a condition of bailout a dollar of your hard worked money (let alone 10%) can be forcefully taken from you, what would you do? Stuff your money under the matteress not in the banks.