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Aren't savers meant to be insured against losses when banks go bust?
Absolutely. Cyprus's deposit protection scheme states deposits up to €100,000 are protected. But in this case the banks haven't collapsed, so it doesn't apply.*
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Hang on, savers are being taxed to help prop up Cyprus's economy?
Technically they are being "bailed in" - and will receive equity (bank shares) in return. But yes, in effect it's a tax on all savers.
Those with under €100,000 will lose 6.75%, rising to 9.99% for those with over €100,000 in the bank."
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How is raiding savers justified?
Officially, because the deal will protect the Cypriot banking sector.
Jeroen Dijsselbloem, the Dutch finance minister, who chairs the eurogroup of finance ministers, told reporters: "As it is a contribution to the financial stability of Cyprus, it seems 'just' to ask a contribution of all deposit holders"."
*They would indeed lose 100% of 'their' money in a bank collapse, they would get some of 'your' money instead...phew!
http://www.guardian.co.uk/world/2013/mar/17/cyprus-savings-levy-questions-and-answers