Basically, it goes like this: the EU bails out Cypriot banks to the tune of 10 billion euros, in partial exchange for a 6.75% to 9.9% raid on Cypriot personal accounts (which is supposed to net about 5.8 billion euros in revenue), collectable probably now Tuesday*. See also here, here, and here.
Naturally, the subjects of Cyprus (I can't in either good conscience or grammar call them "citizens") are freaking out and trying to yank what money they can out of the banks; many wonder if the rest of the EU is going to follow suit. Should the average European be worried? Well, Walter Russell Mead (who is not entirely sympathetic to the Cypriots, given that they've been operating as money launderers to various unsavory Russians for some time) notes this:
The European financial authorities are swearing up and down that they will never, ever do anything like this again and that the rest of Europe’s banks are as sound as the euro itself, but that of course is exactly what they would say if they were planning to take much of your money away.
Mind you, if that money's in a sock in a dresser somewhere then the authorities can't actually confiscate it electronically. If I lived in Europe I'd have cleaned out my bank accounts and canceled direct deposit before I sat down to write this post. Because there's nothing quite as precedent-setting as a one-time, last-ditch emergency measure.
Moe Lane (crosspost)
*Note that the article indicates that Cyprus is going to partially 'repay' the people getting the haircut with highly speculative natural gas revenues. I would recommend that people not... rely on that. Or that the Cypriot parliament will not ratify the agreement.