BRUSSELS, March 29 (UPI) -- Europe is at growing risk of mass capital flight amid fears EU regulators would apply the Cyprus model of taxing deposits to rescue eurozone economies, economists said Friday.
EU leaders in Luxembourg said applying the Cypriot "bail-in" model of levying bank deposits to other eurozone countries in difficulty could lead to a flight of investors from Europe, Germany's Der Spiegel said.
Euro Group President Jeroen Dijsselbloem caused a stir -- and panic in financial markets -- when he hinted Cyprus-style bail-ins could be applied elsewhere.
Luxembourg Finance Minister Luc Frieden warned the Cyprus example of taxing people who hold 100,000 euros -- $129,000 -- or more in their accounts could drive investors out of Europe.
"This will lead to a situation in which investors invest their money outside the eurozone," Frieden told Der Spiegel. "In this difficult situation, we need to avoid anything that will lead to instability and destroy the trust of savers."
Luxembourg Prime Minister Jean-Claude Juncker also denounced suggestions of levying deposits in the European Union.
"It disturbs me when the way in which they tried to resolve the Cyprus problem is held up as a blueprint for future rescue plans," Juncker told German public broadcaster ZDF.
"It's no blueprint. We should not give the impression that future savings deposits in Europe might not be secure. We should not give the impression that investors should not keep their money in Europe. This harms Europe's entire financial center."
Despite the debate, financial markets are far from reassured. The Financial Times said Dijsselbloem, until recently seen as "boring and responsible," had not only caused excitement but spooked the markets.
The Financial Times suggested the Dutch finance minister might be the person Germany was looking for as European Union heads toward a "sea change" in the way it may handle future financial crises.
"Foisting the burden of bailouts on private investors has been a priority for Berlin since the first Greek rescue, in May 2010, only to be blocked by Paris and the European Central Bank. In Mr. Dijsselbloem, they now have a kindred spirit," the Financial Times said.
Spain's El Mundo called Dijsselbloem a "pawn" of Germany's Chancellor Angela Merkel, who was depicted in several Spanish newspapers as knitting and smiling with satisfaction over the Cyprus outcome.
Dijsselbloem's comments caused markets to fall earlier in the week and concern over the future possibility of levies on deposits continues to worry investors in Europe.
All signs indicate the Cyprus bailout continues to be deeply divisive for financially troubled Europe. Center-left Eleftherotypia newspaper in Athens said Cyprus carried a message of warning for the other troubled EU countries in southern Europe.
European Parliament lawmakers are already looking at a levy on depositors or investors as future options for the eurozone.
Italian news media said deposit levies of up to 40 percent could be considered for future rescues. Le Monde in Paris said the Cyprus experience strengthened argument for a fuller banking union. It said Cyprus was helped but not saved by the rescue package.
Cypriot President Nicos Anastasiades said Friday that Cyprus would remain in the eurozone but criticized the bailout deal that made that possible.
Anastasiades, speaking in Nicosia, said the bailout deal from Brussels made "unprecedented demands that forced Cyprus to become an experiment."
"We have averted the risk of bankruptcy. The situation, despite the tragedy of it all, is contained," he said.
Cyprus is the fifth eurozone country to receive a bailout, joining Greece, Ireland, Portugal and Spain.