Andrew Lilico appears on BBC Radio 5 Live Breakfast

Andrew Lilico appeared on BBC Radio 5 Live to discuss the proposed Cyprus bailout package in which citizens will experience a one-off tax on their deposits.

Dr Lilico stated that in principle, depositors should be exposed to risk when a bank goes bust as their deposits are in fact a loan to the bank.

“If you loan money to a chip shop and the chip shop goes bust then you’ll own a chip shop. If you loan money to a bank and the bank goes bust then you should own a bank. That principle, which hasn’t been really been respected in recent years is important to a healthy banking system.”

Unfortunately in Cyprus, they have not gone about this measure in a sensible way. They have spared bondholders from the tax, punished all banks rather than those that are bust and have not respected the euro deposit insurance limit.