I've come across some scare stories that a "bail-in", being the opposite of a bail-out, is where a bank uses deposits to restructure their capital, and that the average Joe with savings above a certain threshold has their money taken from their account, and in exchange they are issued with some kind of promise or share from the bank.
Apparently this happened in the 2012–2013 Cypriot financial crisis where "47.5% of all bank deposits above €100,000 were seized."
Despite studying university level economics, I'm a layman, and find official documentation on this subject utterly impenetrable:
- Bail-in powers implementation (gov.uk)
- Executing bail-in: an operational guide from the Bank of England (bankofengland.co.uk)
- Bank of England sets out bank rescue rules (bbc.co.uk)
What's the straight non-scare-story easy-to-understand version of this?
Can a bank can literally just decide that your money is now theirs? If so, when & how?