For most of us, banks represent a trusted and safe harbour for our money. Investing in fixed term deposits for example, is widely seen as a low-risk strategy. The global financial crisis changed that view for some, as it became apparent that banks could fail and put savings at risk. But governments, including Australia’s, moved to insure deposits and those investors with large savings reacted by shifting money around between banks to spread that risk.
For Europeans and the Cypriots in particular, the ongoing financial crisis has been a stark reminder that governments, as well as banks, can fail — and that once that happens, people’s life savings can fail and disappear with them.