In the worst case scenario, the new levy could cause a run on banks in countries like Greece.
But that may not be enough to stop a Europe-wide run on banks by depositors who fear a currency break-up.
The fear was this tax trend could cause a run on banks, with wealthy account holders pulling their non-insurable cash out and putting it in safer banks in northern Europe or elsewhere.
Critical infrastructure such as bridges, railways, airports, and power grids become primary targets, there is looting and destruction of company assets all of which is accompanied by a run on banks. for rival factions.
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Economists have warned that a run on banks would result if Greek depositors fear their savings would be wiped out in the event Greece exits the euro zone and begins using a different currency.
Mr Buiter acknowledges that Britain has access to currency swap lines from the world's biggest central banks, which would help it prevent a run on the banks.
They are currently sitting back and watching a damaging run on the banks unfold.
He tells us his suppliers there are worried about a run on the banks.
Branches were replenished with cash overnight and police were deployed amid fears of a run on the banks.
But it seems the damage has already been done: a run on the banks now looking increasingly likely.
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Both the government of President Eduardo Duhalde and the IMF want to prevent a run on the banks.
The biggest threat is that some event sparks a run on the banks - in either Greece or Spain.
These demands amounted to a virtual run on the banks and helped to bring down Bear Stearns and Lehman Brothers.
Some observers had predicted that efforts to renegotiate the bailout could lead to a run on Greek banks and deeper misery.
It is the very real threat of another run on big banks and money market funds, as took place in 2008.
Transactions: There would be controls on bank transactions to stop a run on the banks with money being taken out of Cyprus.
Last week, Europeans essentially saw a run on their banks as individuals and businesses sold the Euro and bought the U.S. Dollar.
Outside the euro, the Greek people have been told, there would be a run on the banks, exchange controls, bankruptcy and hyperinflation.
Some economists even fear a run on Vietnamese banks in the absence of robust measures to shore up the country's financial sector.
As leaders prepared to tax bank deposits in order to prevent a default, citizens panicked and caused a run on the banks.
There are fears that a Greek exit could trigger a run on the banks - not only there but in other Eurozone countries.
Strict capital controls - unprecedented for the eurozone - are in force in Cyprus, limiting cash withdrawals to prevent a run on the banks.
If investors stop fearing the worst-case scenario a run on European banks it would remove a lot of anxiety from the market.
Britain is far less exposed to a run on its banks by foreign depositors than Iceland was, says Ben Broadbent, an economist at Goldman Sachs.
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Many fear a run on the banks, causing the country to be forced out of the euro - heralding in turn the return of the drachma.
Critics had feared that efforts to renegotiate the bailout would set up a confrontation that could lead to a run on Greek banks and deeper misery.
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And the scariest thing, I think, I've seen yet, was what happened to IndyMac in the summer, in July, when you had a run on the banks.
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