What’s missing from this is e human element. When you go after depositors for cash, you are violating a kind of trust that has been built up for over a hundred years. That’s the main crisis point here not who should pay for insolvent banks. You’re protecting the taxpayers but at the expense of public trust in the banking system.
Some of these banks are completely insolvent. Worse, it wasn't a secret that Cypriot banks were in trouble. What do you think happens when a bank collapses? Someone either bails it out (taxpayers) or the shareholders and uninsured deposits get wiped out. I agree it's a terrible situation, but a haircut on deposits over 100k Euro is better than losing everything - and it's certainly better than having the tax payers bail more banks out.