I’m surprised they’re doing it this directly, but I guess they have no choice.
Typically a country would accomplish the same (usually a lot more, in fact) simply by devaluing their currency, as Russia and Argentina did is recent decades, thereby extracting more like 60 to 99% of the value of accounts.
But Cypress is tied to the Euro, so they have to be more direct - and simply grab the money flat-out. In any case, the governments know where the money is, and they WILL get their hands on it. And if the people of Cypress think this will end (i.e., no more confiscations), they will be in for a BIG SURPRISE.