Last update 14-Apr. Links from oldest to newest. The legendary "angry cab driver"-video is definitely not safe for work.
Cypriot
bank deposits hit in €10bn bailout deal – Brussels
blog / FT
Euro-area
finance ministers agreed to tax bank deposits in Cyprus in an unprecedented measure to
forge a 10 billion-euro ($13 billion) rescue plan. Cyprus will impose a levy of 6.75 percent
on deposits of less than 100,000 euros -- the ceiling for European Union account
insurance -- and 9.9 percent above that.
The euro
zone struck a deal on Saturday to hand Cyprus a bailout worth 10 billion euros
($13 billion), but demanded depositors in its banks forfeit some money to stave
off bankruptcy despite the risks of a wider bank run.
Cypriot
Finance Minister Michael Sarris said a planned levy on bank accounts in the
country to help shore up its finances will involve compensation for depositors
in the form of shares in the financial institutions.
Rehn Rules Out Future ‘Stability
Fees’ on Euro Bank Depositors – BB
European
Union Economic and Monetary Commissioner Olli Rehn said there won’t be a repeat
of the tax on bank deposits that was imposed as part of Cyprus’s aid program. Asked whether a
future EU-mandated bank levy can be categorically ruled out, Rehn said that “it
can and there is no concrete case where it should be considered.”
Cyprus Bank Deposits to Be Taxed in
$13 Billion Bailout
– BB
Cyprus’ Bank Deposit Bail-in – naked
capitalism
Unfair,
short-sighted and self-defeating
Tough, painful decision – incyprus
Best of a bad deal – incyprus
No cause for panic – incyprus
UPDATE 1
The euro
zone struck a deal on Saturday to hand Cyprus a bailout worth 10 billion euros
($13 billion), but demanded depositors in its banks forfeit some money to stave
off bankruptcy despite the risks of a wider run on savings.
Germany's finance minister said on Saturday
he would ask parliament to agree the outline of a euro zone bailout for Cyprus as soon as possible, to allow the
island's international lenders to hammer out details.
Euro zone
ministers struck a deal on Saturday to hand Cyprus a bailout worth 10 billion euros
($13 billion) to stave off bankruptcy. Under the program, the island's debt
should fall to 100 percent of economic output by 2020.
People in Cyprus have reacted with shock to news of a
one-off levy of up to 10% on savings as part of a 10bn-euro (£8.7bn; $13bn)
bailout agreed in Brussels.
Savers race
to ATMs as an unprecedented EU bailout of Cyprus demands all of them, including Brit
ex-pats, pay a levy of up to 10%.
Angry
Cypriots try in vain to withdraw savings as eurozone bailout terms break taboo
of hitting bank depositors
Savers to take a hit on their
deposits as Cypus becomes fifth country to receive eurozone bailout – This
is Money
UPDATE2
Cypriot bank deposits hit in €10bn
bailout – FT
Anger as Cypriots wake up to savings
grab – FT
UPDATE3
This is a
breach of fundamental property rights, dictated to a small country by foreign
powers and it must make every bank depositor in Europe shiver.
This is a
breach of fundamental property rights, dictated to a small country by foreign
powers and it must make every bank depositor in Europe shiver.
European
officials have spent the past six years moving heaven and earth to ensure that
no depositors with the continent's banks suffer a loss despite the financial
strains the banks have been under… So is Cyprus different?
A stupid idea whose
time had come – alphaville
/ FT
A “one-off”
often isn’t. Calling something after “stability” isn’t very stable. Saying that
something is not a precedent usually makes it one.
The lesson
here is that the EU's single-market rules will be flouted when the Eurozone,
ECB, and IMF say so.
Shock in Cyprus as bailout brings
bank account haircut
– ekathimerini
Cyprus state broadcaster CyBC reported on
Saturday that German Finance Minister actually entered the Eurogroup meeting on
Friday proposing a 40 percent haircut on Cypriot bank accounts. Sarris stated
on Saturday that this had also been the proposal of the International Monetary
Fund.
One general
principle that the EU continues to pursue is tightening the linkage between
solvency and sovereignty. This is vital and the basis upon which a more
integrated Europe will be built. To
the extent one becomes less solvent, one must surrender greater sovereignty.
Cyprus was insolvent. A large swath of its
sovereignty has been ceded to the EU.
Europe, and especially Scandinavia which has consistently remained off
the radar, is literally off the charts when it comes to LTD ratios.
The clear conclusions
to us are that the Troika have gone too far, and Eurozone deposit insurance is
now worthless. The Troika have let the cat out of the bag, and we do not think
it likely that this will eventually be implemented as it is likely to result in
protests, serious rioting, and possible assassinations (given the alleged
involvement of the Russian mafia). The market reaction to this is likely to be
rather bad.
Europe Does It Again: Cyprus Depositor Haircut "Bailout" Turns
Into Saver "Panic", Frozen Assets, Bank Runs, Broken ATMs – ZH
UPDATE 4
For Everyone Shocked By What Just
Happened... And Why This Is Just The Beginning – ZH
UPDATE 5
Deposit insurance, bank runs,
international currencies, and the inflation tax – Worthwhile
If the
banking sector is too big, and if bank losses are too big, relative to the country's
ability to pay, deposit insurance as a way to prevent bank runs is not credible
and won't work in a country that cannot print.
Is Euro-geddon Nigh? – Twenty-Cent
Paradigms
One of the
most basic lessons from the 1930's, as well as the semi-regular banking panics
of the 19th century, is the importance of preventing bank runs.
The big
winner here is the ECB, which has extended a lot of credit to dubiously-solvent
Cypriot banks and which is taking no losses at all. And although they might
wake up bruised, the big Russian depositors are probably winners too, given
that they risked losing everything and will end up losing just 10%. Finally, of
course, there are all the hedge funds who have been betting that the Cypriot
government won’t default: they’re all popping Champagne right now.
Facing Bailout Tax, Cypriots Try to
Get Cash Out of Banks
– NYT
What do you
think those other depositors in Spain, Italy, Greece, etc., are going to feel like doing
when they realize that, if their banks ever need a bailout, they might have
their deposits seized?
The problem
isn't that Cypriot depositors have to make a co-pay, but that the co-pay costs
are not being divvied up among Cypriot depositors and the other creditors and
equityholders of Cypriot banks either per absolute priority or ratably.
I have no
doubt that this decision will haunt them/us for decades.
Cyprus bails-in depositors to reduce cost of Eurozone
bailout - a turning point in the Eurozone crisis? – Open
Europe
Cyprus parliament postpones session
to discuss bank levy
– Reuters
UPDATE 6
Given the significance
of what has happened it would be logical to assume that a huge safe-haven trade
could be the market’s response.
Mohamed
El-Erian: European officials were right to look for a bold approach for Cyprus. But in compromising excessively on
critical design elements, they risk ending up in the disruptive muddled middle:
not going far enough to solve the country’s problems, and not being
sufficiently careful in containing potential negative externalities.
What will savers do? – Buttonwood’s
/ The Economist
Early in
the crisis, a wise ex-colleague wrote to say that "Savers will pay for the
mess. They are the only ones that have any money left."
The
stealing of bank deposits is a complete no no but the IMF and EU have done it
anyway. The outcome will be very unpleasant.
UPDATE 7
For the
fact is that deposit insurance everywhere in the EU has now been undermined.
The precedent has been set for insured depositors to suffer losses in order to
protect Russian oligarchs and reckless banks. If the Eurogroup can impose this
on Cyprus, it can do so elsewhere too.
Cyprus Parliament To Delay "Rescue" Vote
Due To Lack Of Support, Despite ECB Pressure For Pre-Trade Open Decision – ZH
This could
go down as a blunder of historic proportions. It also shows that EU
governance already is a disaster and profoundly anti-democratic in the worst
sense of that term.
‘Significant
near-term risks after flawed Cypriot deal’
UPDATE 8
In short,
my guess is that the (dangerous) haircut on deposits was the EU’s idea, while
the (utterly insane) haircut on insured deposits was Cyprus’s alone.
Cyprus Bank
Deposits to Be Taxed in $13 Billion Bailout – Golem
XIV
What this
on-going bank crisis has shown over and over, is that no regulator, no
parliament, no country will allow any of its systemically important banks to be
found guilty of a crime.
Cyprus Details: Blackmail, Bulldozer Threats, Bank
Holiday to Tuesday; Calls to Exit Eurozone, Other Reactions – Mish’s
UPDATE 9
FX Market Opens, EUR Hammered, CHF
Bid; S&P To Open -30pts – ZH
71% of Cypriots Say Parliament
Should Reject Bailout
– ZH
The Bank of
Spain said on Saturday there were no signs of capital flight from Spain as a result of developments in Cyprus, where euro zone ministers are
demanding that depositors forfeit some of their savings to avert bankruptcy.
The Cypriot Haircut – Krugman
/ NYT
It’s as if
the Europeans are holding up a neon sign, written in Greek and Italian, saying
“time to stage a run on your banks!”
"A tax
rate of 15% on financial assets would probably be enough to push the Italian
government debt to below the critical level of 100% of gross domestic
product."
Beyond financial repression – alphaville
/ FT
UPDATE 10
Cyprus was
working on a last-minute proposal to soften the impact on smaller savers of a
bank deposit levy after a parliamentary vote on the measure central to a
bailout was postponed until Monday, a source said.
Cyprus President Nicos Anastasiades says
he is battling against eurozone demands that all bank customers pay a one-off
levy in return for a bailout.
Germany's
finance minister said on Sunday Berlin would have respected the bank deposit
guarantee on small savers' insured deposits but the Cypriot government,
European Commission and European Central Bank (ECB) decided against this.
S&P Futures Plunge To 1-Week
Lows; Gold Jumps To 3-Week Highs – ZH
UPDATE
11
By waiting until
the Italian elections were over, the EU painted itself into a corner with Cyprus. Lacking other options, it was
forced to go to the pockets of ordinary depositors, giving birth to fears of
bank runs in Europe.
The War on Common
Sense Continues – Tim
Duy’s Fed Watch
Shocking, I
know. Who could have predicted that the populous would react poorly to an
assault on depositors? Everyone. Everyone would have predicted this.
Everyone except, apparently, European policymakers.
The sudden
eruption of panic could still be contained; European officials on Sunday night
were looking to revise the terms of the agreement ahead of a vote on the rescue
package in the Cypriot parliament, in order to shield smaller depositors.
A new threat – Free
exchange / The Economist
The
possibility that depositors in larger economies might worry for the value of
their savings, leading to panic and self-fulfilling crises elsewhere…The more
damaging effect may be the continued erosion of faith in the legitimacy of
democracy in the euro zone.
Teaching a lesson,
lesson learned – alphaville
/ FT
The lessons
that Germany and other northern euro zone countries thought
would be learned from the Cyprus bailout:
The stupid idea, and
the system – alphaville
/ FT
Ultimately
the defence would seem to be that it was always clear a great deal of trust
would be lost in governments forever as the price of passage through this
crisis, and Cyprus was no different. Frankly, I think
if we take up this political quietism and do not restore that trust, the crisis
will be never-ending.
Changing
the ratios would be significantly more progressive, obviously. We’ll find out
soon whether such a change will indeed be made, and (just as important) whether
it would still get enough votes to pass the Cypriot parliament.
Charles
Wyplosz: The Cyprus bailout package contains a tax on bank deposits. This
column argues that the tax is a deeply dangerous policy that creates a new
situation, more perilous than ever. It is a radical change that potentially
undermines a perfectly reasonable deposit guarantee and the euro itself.
Historians will one day explore the dark political motives behind this move.
Meanwhile, we can only hope that the bad equilibrium that has just been created
will not be chosen by anguished depositors in Spain and Italy.
But what we
do know is that, once again, the terms "bank run" and "loss of
confidence" are making the rounds in all of the Chief Strategist notes and
the macro masturbation newsletter complex. We don't want to hear terms like
these.
…while I
think it is absolutely moronic, I also think it is worth putting in context.
One thing that people miss is that there are a lot of threats to wealth.
One is taxes, one is outright confiscation, and one is inflation.
Harvinder
Sian and Michael Michaelides of RBS: Big picture: This is toxic and a policy
error.
Long bunds,
sell the euro, sell periphery, Spain could underperform Italy, but nobody in the periphery wins.
Sell-Side Strategists Summarize
Cypriot Tsunami – ZH
Roundup of
views
The
European Union and the European Central Bank and the IMF have just advocated
the confiscation of private property for their own indulgence.
Sowing the Wind – PragCap
For the
fact is that deposit insurance everywhere in the EU has now been undermined.
The precedent has been set for insured depositors to suffer losses in order to
protect Russian oligarchs and reckless banks.
Before you panic, take a moment to
think about Cyprus et al – TradingFloor
I cannot
urge this strongly enough, do not panic! The dust is far from settled and there
will be plenty more of it in the days to come. Instead of trying to outsmart
political sound bites using spot FX, look at the viable alternative of FX
options.
UPDATE
12
A Rubicon crossed – MacroScope
/ Reuters
The finance
ministers insist it is a one-off (as they did for Greece) but if investors and bank
customers fear a precedent has been set, there could yet be a serious backwash
for the euro zone. And all this for six billion euros?
Should
depositors in Cyprus or other peripheral countries feel
safe now? They may not. After all, deposit guarantee schemes do not guarantee
against a levy. Depositors may also have to factor in that the one-off levy
could inspire national governments to do the same thing. So the risk of bank
runs has just gone up.
WTF Were They Thinking? – Global
Macro Monitor
UPDATE 13
Cyprus heading for bank run after
bailout deal – euobserver
The Cyprus
bailout deal on losses for all bank savers - from pensioners to Russian
oligarchs - is turning into a bank run, with dangerous implications for other
crisis-hit countries.
Cyprus's parliament votes on Monday on a
plan to seize money from bank deposits as part of an EU bailout, a move that
has sent a shiver across the bloc, caused the euro to tumble and stock markets
to dive.
S&P warns of socially explosive
situation in euro zone – Reuters
Standard
and Poor's sees a high risk that Spain, Italy, Portugal and France will not be
able to carry through necessary reforms as the unemployed become less willing
to put up with austerity, S&P's Germany head Torsten Hinrichs told a
newspaper.
There
probably won’t be any immediate contagion from Cyprus to other crisis countries. After
all, banking systems in Greece, Spain, Portugal and Ireland have recently been recapitalised.
Meanwhile, the combination of Cyprus’ relatively huge banking sector and
the fact that it is perhaps small enough to experiment with make it a special
case. Even so, citizens in the rest of the euro zone now know that, if push
comes to shove, their insured deposits could be grabbed too.
If the Cyprus deal represents a more assertive German
approach, it will be far more difficult to actually trigger the OMT as that, in
turn, depends on whether the debtor country will agree to be put on a bailout
programme, with tough conditions (a prerequisite for it to tap the OMT). Cyprus is small enough to boss around, but
Italy or Spain?
UPDATE
14
Cypriot Outrage
Over Tax Could Derail Euro-Area Bailout – BB
In a bid to
ease a run on banks, depositors who keep their account for two years will
receive securities linked to future revenue from the country’s gas reserves,
the president said.
The ugly
Cypriot bailout reinforces a lesson from Greece: Peripheral nations’ membership in Europe’s financial inner sanctum creates
moral hazard and a dangerous tendency toward instability.
Here is the
current state of play regarding today’s vote, information from various local
sources. Session starts at 4pm local (GMT+2)
UPDATE
15
quick look
at initial market reactions
A synopsis
of the key issues relating to the bailout
UPDATE 16
UPDATE
17
A rescue plan that will kill us – Cyprus
Mail / presseurop
Delaying the not inevitable [updated] – alphaville
/ FT
The Russian angle – alphaville
/ FT
In 2011
alone, some $80 billion flowed out of Russia and much of that money had been
channelled though Cyprus, according to the BND. Russians have deposited $26
billion in Cypriot banks, says the BND. That is well above the annual GDP of Cyprus.
It has to
be impressed on Germany that crises are a lot more
"Run Lola Run" or "The Great Escape" than
"Faust": the point is to get out with minimum collateral damage first
and mete out punishments and lessons in morality second
We shouldn't over-state the risk of
deposit-led contagion,but the Cypriot bailout deal is political dynamite – Open
Europe
How might a revised Cypriot bailout
deal look? – Open
Europe
Satyajit
Das: It would be ironic if Cyprus, one the smallest countries in Europe with
little over 1 million people and about 0.5% of the European Union (“EU”)
economically, were to prove a key inflexion point in the crisis.
"Depositor Repression" May
Spread To Swizterland, EURCHF Spikes – ZH
UPDATE
18
A short history of bank deposit and
levies – Marginal
Revolution
Island Nightmares – Krugman /
NYT
What is it
about islands around Europe’s periphery?
linkfest
Euro Officials Signal Flexibility on
Cypriot Bank Levy –
BB
European
policy makers signaled flexibility on the application of an unprecedented bank
tax in Cyprus, seeking to overcome outrage that threatens to
derail the nation’s bailout. European shares and the euro fell.
UPDATE
19
More on the Russian angle – alphaville
/ FT
The hunt
for an accurate Russian exposure figure to Cyprus continues. Here’s Danske Bank’s
Vladimir Miklashevsky with the best estimate we’ve seen yet
Merkel Says "Cyprus is a Special Case" (So was Greece); Is Spain the Next "Special Case"? Portugal? Merkel Guarantees German Deposits – Mish’s
The real
driver for this blatant theft is the re-election of Merkel.
It is a
pity that the Cyprus deal had some major drawbacks,
despite the good intentions, and the lack of adequate information on the
details of the financial assistance programme raises a large number of
concerning questions.
This was a
deliberate policy decision and not one based in economics. After all the size
is rather small, only 17billion. In other words, they chose the option to cut
the deposits not because they had no other option but because they wanted to
pass a political message.
Putin Lambasts Cyprus Bank Tax – Forbes
Legalised Banking
robbery – Breakingviews
/ Reuters
It appears
that the worst case for Russians will be 15.26% - this is how much of all Cypriot
deposits €100K and higher would be taxed by if there is 0% tax on the small
deposits.
The Cyprus Bank
Deal: What It Means
– PIIE
UPDATE
20
A short history of bank deposit and
levies – Marginal
Revolution
Island Nightmares – Krugman /
NYT
What is it
about islands around Europe’s periphery?
linkfest
Euro Officials Signal Flexibility on
Cypriot Bank Levy –
BB
European
policy makers signaled flexibility on the application of an unprecedented bank
tax in Cyprus, seeking to overcome outrage that threatens to
derail the nation’s bailout. European shares and the euro fell.
The Яussians Are Coming! The
Яussians Are Coming!
– Krugman
/ NYT
In our
view, the bailout does not change the overall picture for the Euro area here
and now even if the final bailout terms include a depositor haircut on deposits
below 100k, which is the EU limit for deposit guarantees per bank. Indeed,
there is little reason to expect serious contagion or outright bank runs in the
periphery at the moment… However, the current deal clearly increases the
longer-term risks.
There is no
longer equal protection for savers and confidence in the eurozone banking
sector has received a body blow.
Financial markets haven't freaked
out over Cyprus. That doesn't mean we're in the clear – Wonkblog
/ WP
Based on my
analysis, the worst fear of the pessimists, which is a bank run in the
eurozone, will not materialize. Two key risks to this: Cypriot parliamentary
approval and France.
The Cyprus bail-in is qualified good news, in
the eyes of Citi’s chief economist Willem Buiter.
What are the Italian and Spanish
press actually saying about the Cypriot bailout? – Open
Europe
Press review: ‘Blackmail has
replaced solidarity’
– presseurop
Equity
benchmarks for Italy and Spain underperformed their European
counterparts today following news of the proposed Cyprus bank bailout, but
credit markets in both countries have seen a muted reaction.
There have
been 22 instances of deposit freezes in the past 30 years, and 20 of them
resulted in a sovereign debt restructuring.
Just one
major Western financial institution—the U.K.’s Barclays PLC—has an on-the-ground presence in Cyprus, according to ECB data.
This is the
point at which the links within the eurozone will begin to pop apart, when
citizens will turn to Beppe Grillo-style solutions, to nationalists, extremists
or to anyone who promises a different path. This is the point at which the
vehicle stops functioning and the road ends.
JPMorgan: Opening
"Pandora's Deposit Box" Means "More Extreme Deposit Flights In
Future Crises"
– ZH
Cyprus is a "the death knell for an
EU Common Deposit Guarantee scheme, which was to be an integral part of the
Banking Union proposals"
Senior Bonds: Last Ones Standing – WSJ
In the
bailout deal that the euro zone and the IMF hammered out for Cyprus, one class of investors once again
made a lucky escape: senior bank bondholders.
The
deposit-confiscation "bailout" of Cyprus reveals much about the Eurozone's
fundamental neocolonial, neofeudal structure.
Germany’s role in imposing the euro bloc’s
first levy on bank deposits, in Cyprus, shows Chancellor Angela Merkel’s
dilemma in explaining to voters facing September elections why they should pick
up the tab for another bailout.
UPDATE
21
The crisis
in Cyprus highlights the need for common European
regimes on deposit insurance and on winding down failing banks.
Majority Of Cypriot Parties Refuse
To Support Deposit-Loss Law – ZH
Just three
weeks after being elected president of Cyprus, Nicos Anastasiades traveled to Brussels for his European debut last
Thursday. His fellow leaders were all friendly enough.
“The Eurogroup
continues to be of the view that small depositors should be treated
differently…” – alphaville
/ FT
A new instrument - here come
debt/equity swaps!
– ObservingGreece
When it
comes to an imposed hit, any differentiation must be made on the basis of risk
awareness of those who could be hit…the plan also hits regular savers who had considered
themselves to be protected…This mistaken differentiation, not the imposed
debt-equity swap per se, is the enormous error underlying the Cypriot plan.
The
decision to tax ordinary savings accounts at Cypriot banks as part of a €10
billion EU bailout package has been met with sharp backlash at home and abroad.
The measure signifies a new level of escalation and could be too risky, German
commentators say on Monday.
The
discovery of significant energy reserves in the eastern Mediterranean over the past two years has been
held up as a beacon of hope for debt-crippled Cyprus.
The idea
that countries whose inability to rub along together had often brought the
world to ruin could be so welded together remains utterly breathtaking when you
stop to consider it,
Eurogroup Folds: Tells Cyprus To "Safeguard" Depositors Under
€100,000 Euros; Angry Russians To Get Even Angrier – ZH
UPDATE
22
Oh look,
the world hasn't ended! – TradingFloor
Ken
Veksler: The Cypriot debacle continues and goes from the sublime to the utterly
ridiculous as each new headline hits the airwaves.
Steen
Jakobsen: Whatever happens this week on the design of the levy on deposits it
will constitute a major change where a financial tax is now more likely than
ever despite the assurances of this being a one-off. We explore four key
conclusions.
A dinner in
Berlin on Monday with Merkel, Hollande,
Barroso and the heads of 15 big companies should have focused on
competitiveness. But
the elephant in the room was Cyprus.
As auditors
begin work in Cyprus, some experts, such as the European
chief of US due diligence firm Kroll, are questioning the value of the exercise.
EU
defiant over €5.8bn raid on Cypriot savings – euobserver
EU
officials remained defiant on controversial plans for a Cypriot bailout on
Monday, the most tumultuous day for the euro so far this year.
Analysts
were breathless waiting for impending disaster from the bailout in Cyprus. But nothing bad happened.
This is the
deal that no one had the imagination to put on the table during all-night negotiations
last week, and it makes a lot more sense than what we’re looking at right now.
Let the old
banks go bankrupt, leaving the ECB with EUR 9bn of losses and wiping out both
the subordinated & senior bondholders (EUR 1.75bn). These new banks are now
adequately capitalised & under EU law, the ECB will not be able to prevent
their participation in Target 2 via the Central Bank of Cyprus. The ECB may well kick &
scream, but there will be nothing they can do about it.
Cypriot
crunch point – MacroScope
/ Reuters
Cypriot
lawmakers are supposed to vote today on a bailout that hits at least some of
its bank depositors but the president’s spokesman has said any such legislation
is unlikely to pass. This could be brinkmanship but it doesn’t sound like it.
What if
the Cypriot parliament votes against the deposit levy? – Open
Europe
Why now?
European depositors’ money began to flow out of Cyprus’ banks back in 2010. Indeed, most
European depositors have already found the exit door. Over that same period,
non-Europeans (read: Russians) have increased their Cypriot exposure.
Cyprus Vote Delayed Once More As Latest
Haircut Proposal Proves Insufficient For Parliament Support – ZH
Nicos
Anastasiades is between a rock and a hard place. On one side there’s Cypriot
citizens and official creditors — all, it seems, not liking the levy on
deposits below €100,000 — and on the other, Russia.
What this
should reaffirm to you all is how the handling of the crisis has only succeeded
in heightening the risks associated with this current monetary order. The
excessive amounts of debt have continued to grow and are clearly not
sustainable. Policymakers have resorted to draconian methods of expropriating
private sector assets (households, pension funds and corporates) either by excessive
explicit ‘taxation’ and/or stealth taxation administered by a policy of
negative real rates to help reduce the fixed real burden of debts.
UPDATE
23
Whatever
path is chosen, they need to move quickly. The bank holiday is
unsustainable for long on political and economic grounds, and if not resolved
the question of euro exit could move to center stage.
http://euobserver.com/economic/119485
What
does a guarantee mean? – Buttonwood
/ The Economist
Why EU-wide
deposit guarantee is a bad idea
What is
the eurozone doing?
– Wonkblog
/ WP
How does
that not completely and utterly destroy the banking insurance system? Can the
answer really be, “Your deposits are safe and fully insured, unless the federal
government decides to arbitrarily take money out of them?” And if that is the
actual deal being offered, then isn’t the banking insurance worthless? Why
would you bank in the euro zone rather than, say, the United Kingdom?
So, are
they stupid? – alphaville
/ FT
…whether this
evening’s vote on the bailout will go ahead is till unclear, let alone what the
outcome will be — a question being asked by Credit Suisse’s William Porter and
team seems apropos: What if they’re not “stupid”?
You say
nein, we say oxi – alphaville
/ FT
That’s the
result of Cypriot MPs’ vote on the current version of the bank deposit levy,
rejecting it as a condition of the island’s bailout. That is the first no, after
all these years and the bailouts, to the Troika.
UPDATE
24
The
eurozone was plunged into uncertainty on Tuesday after the Cypriot parliament
voted to reject the €10 billion EU bailout plan by an overwhelming majority.
http://euobserver.com/economic/119492
Who knew
about the Cypriot bank holiday and took capital flight beforehand? – Credit
Writedowns
Almost all
officials involved in the talks have said it wasn’t their decision to seize
deposits from small savers.
The problem
isn’t that Germany and its EU partners were selfish.
It’s that they were stupid.
Next: Capital
Controls – ZH
UPDATE
25
Cyprus had full focus in yesterday's
volatile bond trading. Expect more of the same this session and watch out for
any hard news from the EU, Cyprus or Russia.
If Germany disregards its steadily worsening
image as the big bully of southern Europe, this will come back to haunt Berlin in other areas.
Germany has warned Cyprus the ECB will pull the plug on its two
largest banks if there is no bailout programme, adding that the terms of the
rescue will not be changed.
The Cypriot
finance minister went to Moscow on Wednesday to seek alternatives
to EU aid, in the latest twist in the island's bailout drama.
Cypriot and
European officials are discussing capital controls for when banks are due to
open next Tuesday. Meanwhile the IMF is coming up with a plan to merge Cyprus’ two biggest banks into a ‘bad
bank’, a source told the pair. The IMF wouldn’t be drawn on that. Where does
the ECB stand in all this?
What
now? – MacroScope /
Reuters
The slow
motion Cypriot car crash of the past five days reached impact point last night
when not a single lawmaker voted for the bailout with bank levy attached – the
first time a euro zone legislature has simply said no. So what next?
Someone
somewhere took a decision that now no one no-where appears to have made
What is
going on in Cyprus? With the Cypriot parliament
rejecting a bailout deal, and the EU standing tough, who will blink first?
Could a proposed bank levy still go ahead and trigger a run on banks in other
countries?
Cypriot
leaders held crisis talks on Wednesday to avert financial meltdown after
rejecting the terms of a European Union bailout and throwing efforts to rescue
the latest casualty of the euro zone debt crisis into disarray.
Cypriot
banks on brink in Icelandic flashback – Reuters
A small
island on the edge of Europe teetering under the weight of its
bust banks. Sound familiar?
The ECB
will not provide Cypriot banks with liquidity indefinitely unless a bailout is
agreed and banks there may not be able to reopen this week as a result,
Austrian Finance Minister Maria Fekter said.
Officials
from the so-called troika are in Cyprus discussing further capital controls
and the possible extension of a bank holiday through to the end of the week, a
European official familiar with the talks said on condition of anonymity
because the discussions are confidential.
UPDATE
26
The rouble was
under notable pressure versus US dollar as Cyprus lawmaker didn’t make situation
clearer as they rejected deposit taxes and thus bailout scheme is in disarray.
If a reasonable
compromise is not reached, the Cypriot parliament does not reconsider,
euro-area partners do not backtrack, and Russia does not step in, then we will
witness a full meltdown of the financial system of Cyprus, bringing misery to its citizens.
It could also endanger Cyprus’s membership of euro-area, bringing
even more harm to the Cypriots. There has to be an agreement.
What
next? – Marc to Market
Don’t
arbitrarily, in the dark of night, out of the sight of democratic processes,
try to make a grab into the whole banking sector. It makes a mockery of rule of
law and the Eurozone.
Eurozone
leaders’ radical step of putting insured depositors in Cypriot banks in harm’s
way was not their only option. This column argues that none of the alternatives
were pleasant but some were less ominous.
The Cyprus rescue package has elicited sharp
reactions. This column argues that a tax on deposits is logical given the
limited options, but guaranteed deposits should be spared on fairness and
systematic grounds; a 15% tax on big deposits would be enough. Contagion is unlikely
since Cyprus is different. Italian and Spanish
savers are already alert to surprises such as the 1992 Italian bank deposit tax.
UPDATE
27
Lars Seier
Christensen, co-founder & CEO, Saxo Bank: The most important game changer
in years and the most frightening tool in the tool box has been pulled out in
the open for a mere USD 5.8 billion.
The latest
chapter in the euro-zone crisis is no longer just about Cyprus. The tiny island's decision to
reject the Troika's bailout plan and seek help from Moscow has tipped the episode into a new
world of geopolitics and Western security.
UPDATE
28
The Cyprus
crisis shows that, for all the faults with the financial crisis rescues in the
United States, the European Union still finds ways to show us how poorly a
bailout could be handled.
Cyprus is the latest casualty of Germany’s ‘one size fits all’ solution to the Eurozone
crisis – europp
/ LSE
Every day
that the banks stay shut, the people of Cyprus may begin to appreciate the
advantages of doing a deal with the euro zone.
The
European Commission has said it was Cyprus itself that insisted on the most
unpopular detail of its bailout. But the commission is not squeaky clean
either, say others.
Up in the air – Free
exchange / The Economist
The most
striking thing about the situation is that broader markets are taking
assurances that Cyprus is a unique case at face value.
European equities are flat for the week, and yields on peripheral sovereign
debt have scarcely budged. Contagion looks like a non-issue. For that, at
least, we can be thankful. Unless it leads to European Commission complacency,
of course, leading officials to drive an even harder bargain—an possibly
precipitate the sort of action, like a Cyprus exit, that might just send markets
into a proper swoon. Things, we should have learned by now, can always get
worse.
Counterparties: Insane in the
Mediterrain – Felix
Salmon / Reuters
Just three
weeks after being elected president of Cyprus, Nicos Anastasiades traveled to Brussels for his European debut last
Thursday. His fellow leaders were all friendly enough.
http://www.zerohedge.com/news/2013-03-18/cyprus-president-rehn-i-told-you-tax-wouldnt-pass-regards-mrs-merkel
First they came for the deposits… – alphaville
/ FT
Mind the sovereign, too – alphaville
/ FT
Some
economists say that they are optimistic about reducing Europe’s debt levels after leaders took
controversial steps in the Cyprus bailout.
UPDATE
29
The
Buchheit bat-signal, a few days on – alphaville
/ FT
With no
firm offer from Russia, Cypriot officials are scrambling
to find alternative money to secure a €10 billion EU bailout.
The
Cypriot Tangle – WSJ
The Cyprus-Russia-European
Union triangle is becoming mighty tangled.
Everything
wrong, in one island package.
UPDATE
30
One of the
striking features of the Cyprus crisis is the extent to which the
ECB is driving the process. It was their threat to stop the flow of easy
money to Cyprus that forced agreement on the
earlier failed tax plan. Now, their threat to cut Cyprus’ access to Emergency Liquidity
Assistance (ELA) if the government does not have an EU-IMF approved program in
place by Monday accelerates events.
Cyprus's bank-deposit tax is one of the
least-costly ways for a government to do austerity.
Explaining ELA – WSJ
The ECB
Thursday seriously upped the ante in the Cyprus crisis. The Frankfurt-based
rate-setters announced that if Cyprus didn’t finally iron out a deal with
international creditors by Monday, then the ECB would cut off emergency funding
to the country’s banks.
Russian PM
Medvedev on Thursday lectured EU commission chief Barroso over the Cyprus bailout, while leaked EU papers
show panic behind the scenes.
Eurogroup
boss Jeroen Dijsselbloem told MEPs on Thursday that Cypriot savers will have to
lose money no matter what the final shape of the bailout deal.
#CypriOut looms – Felix
Salmon / Reuters
Bank holidays aren’t always fun – alphaville / FT
From Nomura
about Cyprus: Indeed, now that the banks have been shut it
seems hard to imagine that a reopening would not lead to a massive run on the
banks.
Ever since Cyprus shut its banks last weekend,
financial experts in Moscow have been trying to figure out how
much of the money in Cypriot accounts derives from Russia.
Euro zone finance
officials acknowledged being "in a mess" over Cyprus during a conference call on
Wednesday and discussed imposing capital controls to insulate the region from a
possible collapse of the Cypriot economy.
Of credible threats and plans – alphaville
/ FT
Selected
quotes from Eurogroup Working Group conference call notes
Clearly,
the risk of an exit from the euro area has increased. Many of
the critics of EMU, who think it is better to be out, may be able to test their
hypothesis. We think Cypriots' lives will be made significantly worse on
an exit.
The task
was never going to be an easy one: impose losses worth about €5.8 billion on
lenders to the Cypriot government and depositors with the country’s banks. And
now the rejection of that effort has led Europe to its latest impasse.
Suddenly, Russia has become a central player in the
Cypriot financial crisis. On the very evening after the Cypriot parliament
rejected a proposed levy on bank deposits that the Cypriot president had
previously accepted as a condition for a bailout package of €10 billion,
Finance Minister Michael Sarris flew from Nicosia to Moscow.
A small
country cleans up its act and joins the international financial community.
Money pours in from abroad. The cash is spent or lent unwisely under the noses
of inattentive or ineffectual regulators. When losses mount, the money flows
out as quickly as it came in. In the end, it’s the little guys who lose the
most.
The
European Union gave Cyprus till Monday to raise the billions
of euros it needs to secure an international bailout or face a collapse of its
financial system that could push it out of the euro currency zone.
How To Fix the Cyprus Bank Disaster in 3 Steps – The
Atlantic
There's a
simple enough way to resolve the mess in Cyprus. It's called printing money.
UPDATE 31
De Grauwe: Euro area in ‘deep trouble’ – Credit
Writedowns
He spoke to
Bloomberg Surveillance about the situation in Cyprus specifically and in the euro zone
more generally. A partial transcript
Finance
ministers for the 17 euro countries are considering a plan to shutter the two
biggest banks in Cyprus and freeze the assets of uninsured
depositors
The EU has
given Cyprus until the close of business on Monday to come
up with a plan to raise nearly 6 billion euros and secure an international
bailout.
Does size matter? Cypriot bank sector problem
went overlooked – Reuters
There was
no official red flag that Cyprus's oversized banking sector posed a
big risk to its economy until last year, when the European Union set up tools
to monitor such imbalances, a Reuters review of EU reports dating back to 2003
showed.
Baltic
state and euro zone aspirant Latvia, already home to sizeable deposits
of Russian money, is not expecting an increase in flows of deposits due to the
woes in Cyprus, its bank regulator said on Thursday.
Bailouts, Bail-ins,
Haircuts and All That: Program Notes for the Cyprus Banking Drama – EconoMonitor
Because banking losses are real losses, someone always
ends up bearing them. The only question is who.
What happens if a Eurozone NCB goes rogue? – self-evident
So what
would happen — what physically would happen — should the ECB governing council
vote to terminate ELA to Cypriot banks, but the Central Bank of Cyprus provided it anyway?
Cypriot lawmakers will begin debate today on
legislation to unlock bailout funds and prevent a financial collapse with a ECB
deadline to cut off funding for its lenders in three days.
What’s
amazing about this fiasco is that Europe’s leaders had almost a year to think about how
to avoid it. Ever since Greece restructured its government debt,
which made up a large share of Cypriot banks’ investments, it has been apparent
that the banks would need a major recapitalization.
End of an Era:
Cypriot Financial Sector Faces Collapse – Spiegel
The disastrous financial situation in Cyprus is
largely a result of the country's crumbling banks. For years, the island nation
profited from its bloated financial sector, but now it will likely have to
liquidate its two largest banks. In Nicosia,
government leaders fear that could decimate the economy.
Saying it cannot guarantee emergency liquidity funding
to Cypriot banks beyond Monday, the European Central Bank is pressuring Nicosia to find
the 5.8 billion euros needed to ward off insolvency. Leading politicians on
Thursday agreed to establish a "solidarity fund" and rejected any
kind of bank levy.
Euro-area finance chiefs, pressuring Cyprus to shrink
its banking system as the condition for a bailout, are reviving demands they
jettisoned last week as too extreme, four European officials said.
Evaluating Potential
For Euro Periphery Deposit Contagion - Goldman Sachs – efxnews
UPDATE 33
Be it the
German finance minister, ECB officials or the head of the Eurogroup - they all
agree on one thing: Cyprus must scrap its "unsustainable
business model" based on low taxes and attracting large amounts of bank
deposits from abroad, mainly Russia.
"The
situation in Cyprus is not good," analysts at
Nomura said with darkly comical understatement at the start of this week. And
yet the financial markets have held remarkably steady.
We want to
summarize reactions among politicians and German press views. The Eurogroup set
up the details of a EUR 10 billion bailout package for Cyprus on Saturday, 16 March. This
programme was heavily criticized in Germany, especially due to the tax on deposits
below EUR 100 000. Yet, the Cypriot Parliament voted against this measure on
Tuesday which is widely perceived as blackmail in Germany. Most commentators insists that
Cyprus needs to come up with the agreed EUR 6 billion in order to receive the
remaining sum from its European partners.
TMM thoughts on Cyprotoxins – Macro
Man
Cyprus is
thus in the early stages of experiencing what it would do were it to leave the
Euro: (i) a household liquidity crisis, (ii) a paralysed financial system,
(iii) a collapse in monetary velocity, (iv) a large loss of national wealth,
(v) capital controls, (vi) shortages of imported basic goods [trade credit for
Cyprus now non-existent], and (vii) an
exceptionally deep recession.
Cyprus is on the brink of becoming the
first country to leave the euro, after the ECB on Thursday issued an ultimatum
on its bailout.
EU
politicians are saying Cyprus must scrap its "unsustainable
business model." But data shows the writing was on the wall ever since the
island joined the euro, five years ago.
Revised TARGET2 Paper & Implications for
ECB of Cyprus Exit – Forbes
Cyprus exit would probably wipe out ECB’s
capital base.
CONTROLS (in Cyprus) – alphaville
/ FT
This is
being reported as the capital control bill that’s close to being enacted in Cyprus
Europe, the ECB and the IMF have put a gun
to Cyprus’ head. The threat has been made public – you
do as we say and seize depositor’s money or else…Either Cypriot members of
parliament ignore the will of the Cypriot people or the ECB stops supporting
Cypriot banks and they implode. Which
would mean either Cyprus leaves the Euro and re-introduces
its own currency (which it could do) or
it tells its people that ALL their money is now gone.
UPDATE 34
Is the ECB Firing
Blanks? – WSJ
On Thursday, the ECB put a gun to Cyprus’s head, but it could be loaded
with blanks.
Guest post: Cyprus
bribe-takers and tax cheats to the rescue – beyondbrics
/ FT
Options for Cyprus
– Bruegel
Capital controls in
Cyprus: the end of Target2? – Bruegel
Why Cyprus Will Pay
Dearly – DealBook
/ NYT
There are no good
alternatives, the author contends. But the longer it takes for Cyprus
to recognize how bleak its situation is, the greater the damage.
The Latest Plan in
Cyprus – Economist's
View
There's "still no
immediate path to a lifeline."
Cyprus MPs pass bank
laws, start bailout talks – euobserver
Cyprus edged back from the
brink of bankruptcy on Friday after MPs agreed to a series of
emergency reforms - including capital controls - in a bid to avoid
financial meltdown.
Everything you need to
know about Cyprus in one FAQ – Wonkblog
/ WP
If Cyprus was America
– Wonkblog
/ WP
The Five Strangest Ways
to Solve the Cyprus Crisis – Wonkblog
/ WP
Cyprus: What are the
Russians playing at? – Felix
Salmon / Reuters
There’s no doubt that
the best outcome for Cyprus, and for the EU, would be for Russia to
extend its help now, before Cyprus’s banks reopen on Tuesday. But
Russia doesn’t want what’s best for Cyprus, or for the EU: Russia
wants what’s best for Russia. And the way it’s acting reminds me
of nothing so much as a classic Wall Street bear raid, designed to
drive down the price of something you want to be able to pick up
very, very cheap. What’s more, it might even work.
Full circle in Cyprus
– Open
Europe
Full circle in Cyprus: The
deposit levy is on the table again
Intransigence in the
face of Cyprus – alphaville
/ FT
The single currency, and
financial markets generally, have been stubbornly stable in the face
of the Cypriot mess (ongoing, obvs) and it’s not really clear why.
Regrets Pour In; Cyprus
Parliament Passes Bailout Plan; Will Her Highness Approve? -
Mish's
Cyprus Capitulates to
Eurozone (Updated) – naked
capitalism
As we’ve indicated, the
big risk coming out of the cramdown of Cyprus is a resumption of the
flow of deposits out of periphery countries, which had been underway
last year but was arrested by the introduction of the OMT. You’d be
nuts to keep your money in a Spanish bank after the brutal treatment
of Cypriot depositors.
Repeat After Me, Cyprus
Is (Was) Not a Tax Haven – naked
capitalism
Cyprus Update –
Krugman
/ NYT
Icelandization, it
seems.
Europe’s Cyprus
Blunder and Its Consequences – PIIE
Unlike in previous
euro-crisis episodes, there is little the ECB can do alone. The
problem is fiscal at the core and must be addressed by elected
leaders. They may conclude that it is best to let Cyprus default,
impose capital controls, and leave the euro area, an option that was
reported to be explicitly considered in European policy circles. But
such a move would violate the promise of European leaders to ensure
the integrity of the euro area, no matter what, and potentially set
off a chain reaction, including possible bank runs in other euro area
member states, starting with the most fragile ones, such as Slovenia
and of course Greece.
The Week That Was –
Money Centers in Focus – Bruce
Krasting
What could happen if
people start pulling their money out.
Cyprus and Eurozone
Bank Deposits – The
Street Light
While I don't know how
significantly confidence in the eurozone periphery's banks have been
shaken by this week's events, I do have an idea of what I will be
keeping an eye on over the coming weeks and months: deposits in banks
in Greece and Spain.
Cyprus Struggles to
Meet Bailout Demand as Deadline Looms – BB
European and Cypriot
officials were locked in talks to find a formula to avert the
Mediterranean island’s financial collapse, struggling to forge
consensus on a bailout package before the ECB cuts funding.
Cyprus Aims to Meet
Bailout Terms Today, Deposit Tax Debated – BB
Cyprus aims to complete a
plan today to meet the terms of a European bailout that may include
tapping bank deposits, its finance minister said, as the
Mediterranean island races to avert financial collapse.
Cyprus Officially
Passes Capital Controls Into Law – ZH
JPMorgan On The
Inevitability Of Europe-Wide Capital Controls – ZH
Cyprus Deposit Levy
Vote Delayed, Will Go "Down To The Wire" As Up To 70%
Deposit Tax Contemplated For Some – ZH
Former Cyprus Central
Bank Head And Senior Fed Economist: "The European Project Is
Crashing To Earth" – ZH
"A Brief History
Of Money In Cyprus" As Gasoline "Runs" Are About To Be
Unleashed – ZH
Cyprus Deal... Or No
Deal: "Anonymous" Rumor vs Euro Commission – ZH
Unsecured Depositors
Of The World, Unite... And Get The Hell Out Of These Countries –
ZH
On the Circus in Europe
– Bruce
Krasting / ZH
Two possibilities - Either
this was a completely bungled effort in Brussels. Or this this was a
deliberate effort to weed out the weak members of the EU. If the
intent was the latter, this will not stop will little Cyprus.
Cyprus weighs big bank
levy; bailout goes down to wire – Reuters
Cyprus conceded on
Saturday to a one-off levy on deposits over 100,000 euros in a
dramatic U-turn as it raced to satisfy European partners and seal an
11th-hour bailout deal to avert financial collapse.
Analysis: "Lex
Cyprus" will set precedents for closer EU union – Reuters
Lawyers have a saying that
hard cases make bad law.
Euro zone finance
ministers to meet on Sunday over Cyprus – Reuters
Euro zone finance
ministers will meet on Sunday evening to discuss a possible rescue
package for Cyprus, the head of the Eurogroup said in tweet.
Cypriot parliament to
debate levy only after Eurogroup meeting: official – Reuters
Will Cyprus be the pin
to burst euro balloon? - The
Telegraph
It’s tempting to dismiss
events in Cyprus as insignificant. Mainstream politicians and
investors, desperate to keep the flame of Western recovery flickering
and the asset price rally on track, insist that the country is “a
special case”.
If capital controls are
introduced in Cyprus, it is the end of the single currency in all but
name – The
Telegraph
European leaders tear up
the rules, with unpredictable consequences
Bailing out Cyprus was
always going to be tricky. But it didn’t have to be like this
There is more than one way
for savers to lose out
Could gas save Cyprus? If
only it were so simple
Angela Merkel is known for
her measured approach to even the most controversial issues. The
crisis in Cyprus, however, has enraged the German chancellor. In
parliamentary meetings on Friday morning, she did little to disguise
her fury -- though she shoulders some of the blame herself.
BofAML: Cyprus defaults,
exits, confidence is shaken – in this scenario, the possibility of
a country exiting the Eurozone could revive contagion risks, only to
be mitigated by much more forceful policy reactions.
‘Banco de Mattress’
looms for Cyprus – John
Dizard / FT
Of course the authorities
anticipate some of these problems, but there are always new ones.
Particularly after the initial shock of control imposition wears off,
the population turns from productive effort to finding ways to game
the system. Some cultures are more resistant than others to this
change in character, but in all cases social cohesion and respect for
law are eroded over time.
The eurozone after
Cyprus – Gavyn
Davies / FT
Raiding Cypriot
accounts will not save the banking system – Sober
Look
The Eurosystem's exposure
to Cyprus is simply insignificant on a relative basis. The ECB's
balance sheet is still massive. It can generate more than enough
interest income in a few months to cover the losses of Cypriot banks'
defaulting on their ECB loans. So why throw good money after bad?
Cyprus-Troika Talks
"Delicate" But Schaeuble "Won't Be Blackmailed"
– ZH
UPDATE 36
UPDATE 40
UPDATE 43UPDATE 36
Repeated meetings ahead of key Eurogroup
session – ekathimerini
Cypriot President
Nicos Anastasiades, seeking a last-minute reprieve from financial meltdown at
talks in Brussels on Sunday, has a "very difficult
task" ahead of him if he is to save the island's economy, a government
spokesman said.
Cyprus’s fate hangs in the balance as euro-area finance ministers meet today
to decide whether the tiny Mediterranean island has done enough for a bailout
that will avert its financial collapse.
Cypriot President
Nicos Anastasiades is on his way to Brussels as his country continues to seek a last-minute
deal to avoid possible bankruptcy.
After a week of
financial turmoil, Colin Freeman in Limassol finds that Cypriots want out of
the euro, and British expats want out of Cyprus
UPDATE 37
UPDATE 38
Cyprus Teeters on Brink as Euro Chiefs Battle Crisis – BB
UPDATE 37
As Deadline Nears, Cyprus
Scrambles to Devise a Bailout –
NYT
Cyprus
seeks 11th-hour deal to avert financial collapse – Cyprus
Mail
With Russia
"Demanding Cyprus Out
Of The Eurozone" Here Is A List Of Possible Russian Punitive Reprisals – ZH
Cyprus
Bailout Needs Rise By €2 Billion As Conditions Deteriorate Rapidly – ZH
Do Capital Controls Mean Cyprus Has
Already Left the Eurozone? – Tim
Duy’s Fed Watch
UPDATE 38
Cyprus
talks struggle in Brussels – FT
Mad scramble to save Bank of Cyprus – Cyprus
Mail
Eurogroup on Cyprus
starts with two-hour delay – euobserver
A gathering of
eurozone finance ministers aimed at sealing a bailout deal for Cyprus before a
Monday deadline set by the European Central Bank was delayed by at least two
hours, as talks between the Cypriot President and the heads of the EU Council,
commission, IMF and ECB ran late.
TIMELINE: Anastasiades to lenders: do you want
to force me to resign? – Cyprus
Mail
Archbishop: those who are to blame should be
put on trial – Cyprus
Mail
Highlights-Comments from eurozone Cyprus
talks – Cyprus
Mail
Anastasiades seeking last-minute Cyprus
reprieve in Brussels – Cyprus
Mail
New Demands Every Half-Hour From IMF; Can Cyprus Be
Saved? Impossible Math – Mish’s
Tales from the Coffeeshop:The terrible price of
pride and stupidity – Cyprus
Mail
WRAPUP 6-Cyprus in last ditch EU talks to save
economy – Reuters
HIGHLIGHTS-Comments from euro zone Cyprus
talks – Reuters
Cyprus Teeters on Brink as Euro Chiefs Battle Crisis – BB
UPDATE 39
Cyprus
crisis could spread, Spain's
economy minister warns – El
Pais
Four Feckless Features Of A Post-Cyprus Europe – ZH
Authored by Gavyn
Davies, originally posted at The FT,
What comes after finance in Cyprus? – Bruegel
The prominent role of
Cyprus's financial services is probably over anyway, irrespective of the actual
content of the forthcoming agreement between the troika and Cyprus. I put together
some simple tables showing the structure of the economy in Cyprus and in three
other countries that suffered from massive banking crises during the past few
years: Ireland, Iceland and Latvia (see a December 2011 policy contribution of
mine comparing the adjustments of these three countries). Here are some
observations.
Meanwhile, Cash Exodus From Cyprus Surges
Despite Bank Closures, Capital Controls – ZH
* AGREEMENT *
UPDATE 40
Eurogroup Statement on Approved Cyprus
Bailout – Credit
Writedowns
Cyprus
Bailout Deal Terms – Credit
Writedowns
Scratch one stupid idea [Updated] – alphaville
/ FT
TIMELINE: Bailout deal reached – Cyprus
Mail
Cyprus
agrees €10bn bailout deal – FT
Cyprus:
It’s not over yet – Felix
Salmon / Reuters
Deal Reached, Damage Done – Mish’s
Eurozone agrees Cyprus
bailout 2.0 – euobserver
Cyprus' Laiki bank is to be wiped out and depositors in Bank of Cyprus will
take a hit under Cyprus' new bailout deal. But details remain sketchy.
IMF Statement on Cyprus – IMF
Rampapalooza As Cyprus-Troika Reach Deal
(Updates) – ZH
"Cyprus Is
The Homage Europe Pays
For The Denial Of A Systemic Crisis" – ZH
Cyprus Said
to Reach Tentative Deal to Avert Default – BB
Cyprus
Salvaged After EU Deal Shuts Bank to Get $13B – BB
Last-minute Cyprus deal
to close bank, force losses – Reuters
Cyprus clinched a last-ditch deal with international lenders to shut down its
second largest bank and inflict heavy losses on uninsured depositors, including
wealthy Russians, in return for a 10 billion euro bailout.
Anxious, angry Cypriots face uncertain future – Reuters
Cypriot parliament does not need to vote on
bailout: German finance minister
– Reuters
This deal sends more constructive signals –
credibility still hurt – Nordea
In the short term, the
agreement will boost risk appetite. In the longer term, the debacle further
hurts the credibility of Euro-zone countries in addressing their problems.
UPDATE 41
UPDATE 41
Will Cyprus Be
Contained? – naked
capitalism
Cyprus
celebration not likely sustainable – TradingFloor
The market kneejerk
reaction to the Cyprus solution may already be behind us, and if not, is not
likely to hold much longer as a number of ugly precedents have been set that
are likely to weigh on the Euro from here.
Guest post: Russia
right to refuse Cyprus bail
out but should back a strong EU
– beyondbrics
/ FT
Cyprus, the
snap takes – alphaville
/ FT
From UBS’s Reinhard
Cluse, SocGen, Simon Derrick at Bank of New York Mellon, Nomura, Credit Suisse,
Barclays, Monument Securities.
Cyprus
bailout in place - but crisis not solved – Danske
Bank (pdf)
Just after midnight, the Troika and Cyprus struck a last-minute deal to avoid a complete
bankruptcy and potential euro exit of Cyprus
Did Russia lose
at Russian roulette? – alphaville
/ FT
At this point it’s
safe to say that if the Cypriot government was trying to coddle Russian
depositors by initially agreeing, way back on March 16, to penalise small
depositors along with larger ones, that has backfired badly.
UPDATE 42
Best of a bad job – Hugo
Dixon / Breakingviews
There are two
lingering doubts. Will capital controls be imposed? And is Cyprus’ debt sustainable given the economy will be
clobbered?
Cyprus is
saved! For now... – TradingFloor
Ken Veksler: Cyprus is saved. Well apparently and perhaps only for
now... Having reached a “deal” at the last minute last night, I don’t get the
sense anyone is breathing too big a sigh of relief, if I’m honest.
Could Cyprus
leave the Eurozone but stay in the EU? – Open
Europe
Historically,
political expediency has trumped EU law. Although it would not be clear cut or
easy – and involve a legal stretch – we believe that in order to take a swift
decision and avoid a Treaty change EU leaders could (and most likely would) use
existing provisions in the EU treaties to allow for a Cyprus euro exit.
Goldman's Cyprus Post
Mortem And A Review Of The Forced "Depost-To-Equity" Conversion – ZH
Russian PM says "stealing continues"
in Cyprus – Reuters
Moscow reacted with anger on Monday to a European
Union bailout of Cyprus that will result in heavy losses for foreign depositors at the
Mediterranean island's banks, many of which are Russian.
Will Putin attempt a last-minute Cyprus
rescue? – Anatole
Kaletsky / Reuters
One of the mysteries
of the Cyprus crisis has been the lack of response from Russia, despite the obvious strategic opportunities,
not just to protect its offshore deposits, but also to exploit the island’s
strategic location and its military and energy potential. A possible
explanation is that Europe’s indecision also paralyzed Russia - until
last night.
Flash Analysis: Cyprus kept
in the euro, but at what cost?
– Open
Europe
Cypriot bank restructure: The good, the bad and
the ugly – TradingFloor
Neil Staines: After
the modest bounce in risk assets on the open to this week’s financial markets
... I would anticipate that the EUR will lose its lustre, and that we will be
trading at new lows for 2013 by the time we enter April.
The new deal on Cyprus
does not only have the right intentions, but averts the two major flows of the
previous deal:
The Eurogroup Statement on Cyprus
Translated. – Macro
Man
CONTROLS continued, as is their wont – alphaville
/ FT
Pessimal Currency Area Theory – Krugman
/ NYT
Cyprus: why not the worst?
The thin end of a very worrying wedge? – qfinance
To most, the recent
decision to fund the bailout of the Cypriot banking system through a sizable
tax on larger depositors is little more than a news story. However my view is that it risks changing the
behavior of large depositors.
Cyprus: The
deal that is not a deal but an understanding – TradingFloor
Steen Jakobsen: This
weekend's 'deal' has no winners - only losers. It left European decision-making
bleeding and without hope of recovery as the EU Commission and IMF exchanged
harsh words all in the name of a power game, never for the sake of future
Europeans.
A rescue programme
agreed for Cyprus on Monday represents a new template for resolving euro zone banking
problems and other countries may have to restructure their banking sectors, the
head of the region's finance ministers said.
Overall, a good deal
has been reached given the bad circumstances of end of last week. It is now
crucial to provide a credible timeline for the opening of banks. Moreover, the
Cypriot authorities should clarify asap what “administrative measures” are exactly
contemplated. Those measures should not limit capital flows across Cypriot
borders as otherwise they would be capital controls. Capital controls would
ultimately mean that a euro anywhere is not a euro everywhere anymore.
Why the new Cyprus deal
sows the seeds of the next European crisis – Wonkblog
/ WP
The next time there is
a banking panic in Europe, it will move much faster, and be much harder to
control, than those of the recent past, as depositors try to get ahead of
future losses and capital controls. And that’s a scary proposition indeed.
Waiting for the fall-out – Free
exchange / The Economist
Several big questions
remain. The most immediate concerns when Cypriot banks will reopen, what will
happen to deposits at that time, and how the Cypriot government will respond.
Major deposit flight is expected, and it is widely anticipated that temporary capital
controls will be imposed.
Coming soon to uninsured deposits near you – Free exchange / The Economist
In other words, Cyprus is absolutely a unique case, BUT if trouble
should come to banking sectors elsewhere in the euro zone hitting uninsured
depositors would seem a sensible way to go.
European Markets Sliding (Fast) – ZH
A Word Out Of Place Sends Europe
Tumbling – ZH
Cypriots Mourn Collapse of Livelihoods as
Bailout Crushes Banks – BB
While they may be
staying in the euro for now, people on the island are lamenting the demise of
an economy built on the banks that ended up sinking it.
Russian President
Vladimir Putin signaled acceptance of an accord reached by Cyprus on an international bailout, a week after berating
an earlier rescue plan as “unfair, unprofessional and dangerous.”
Russia signaled on
Monday it would backstop the European Union's bailout of Cyprus despite anger
that the weekend rescue deal would impose heavy losses on uninsured depositors,
many of them Russian.
Cyprus may impose
controls on the movement of capital but only for a temporary period of time,
the European Commission said on Monday, hours after the island sealed a deal to
close its second-largest bank in return for international aid.
Cyprus crisis puts Austrian bank
secrecy on agenda – Reuters
Cyprus's financial crisis has put Austria's centuries-old tradition of banking secrecy
under fresh scrutiny, posing a potential political problem for Vienna as it faces European Union and U.S. pressure to crack down on tax cheats.
UPDATE 44
Hugo Dixon: The bailout deal that Cyprus reached with its euro zone partners makes the
best of an extremely bad situation but there are lingering doubts on capital
controls and the effect the debt will have on the economy, the author writes.
The success of the Cyprus bailout deal will depend on the social
consensus around it, says Brussels, with the island's GDP expected to dive as the size of the banking
sector is drastically cut.
Dijsselbloem, do remember that careless talk
costs lives…* – alphaville
/ FT
The Eurogroup head was
in triumphalist form on Monday, claiming direct credit for having sent Cyprus into a parallel eurozone (capital controls,
economy obliterated).
Cyprus
Capital-Controls Q&A – WSJ
Following the deal
between Cyprus and its international creditors on a bailout, there are just as many
questions as answers, particularly surrounding the imposition of capital
controls. Here our reporters address some of the most pressing issues.
Another "Euro Is Saved" Moment in
Pictures – Mish’s
http://globaleconomicanalysis.blogspot.fi/2013/03/another-euro-is-saved-moment-in-pictures.html
Athanasios Orphanides
the former governor of the Central Bank of Cyprus was Bloomberg this morning discussing the
inevitable economic decline (via Bloomberg Surveillance):
Eurogroup’s Dijsselbloem Says "Banks
Should Save Themselves" –
ZH
ECB’s reaction to the agreement on the Cypriot
macroeconomic adjustment programme – ECB
UPDATE 45
The Dijsselbloem Principle – Felix
Salmon / Reuters
Dutch finance minister
Jeroen Dijsselbloem, the current head of the Eurogroup, held a formal,
on-the-record joint interview with Reuters and the FT today, saying that the
messy and chaotic Cyprus solution is a model for future bailouts. Those
comments are now being walked back, because it’s generally not a good idea for
high-ranking policymakers to say the kind of things which could precipitate
bank runs across much of the Eurozone. But that doesn’t mean Dijsselbloem’s
initial comments weren’t true; indeed, it’s notable that no one’s denying them
outright.
Dijsselblowing it – Wonkblog
/ WP
And from here forward,
depositors in European banks know that they are on notice, from no less than
the Eurogroup president: If your money is in a bank that runs into problems,
you’re going to pay. It is an admirable victory for market purism, and a loss
for those who want to keep the European financial system in business. Djisselbloem
is relatively new in the job, having been finance minister only since November
and Eurogroup president since January. It is not an auspicious start.
Javier Solana: Today,
the small, divided island of
Cyprus is facing yet another economic storm. But
there is light on the horizon: economic hope in the form of huge offshore gas
reserves, which promise not only to transform the island’s economy, but also to
improve regional cooperation and revive reunification efforts.
Guest post: The case for Cypriot national
equity – alphaville
/ FT
Cyprus: The
Unique Template in Nine Theses
– Marc
to Market
(from Sunday, but
excellent) The broken Euro – Coppola Comment
Nothing like a 99%
drawdown (if/when the market reopens) to rattle the nerves of a buy and hold
apologist.
Act II in Cyprus:
Securing a Much Improved Deal –
PIIE
Ironically, the euro
area can thank the Cypriot parliament and Russia for rebelling the first time
around, thereby backing the Cypriot government into a corner and averting the
Troika’s initial policy mistake of acceding to the Cypriot government’s demands
to impose the levy on insured deposits.
No monetary union can
expect long to survive this sort of self-inflicted political battering. If Europe can make such a horlicks out of tiny Cyprus, just think what might happen when the crisis
once again laps at the doors of larger economies such as Italy, Spain and Portugal.
INSIGHT-Money fled Cyprus as
president fumbled bailout – Reuters
As new President Nicos
Anastasiades hesitated over an EU bailout that has wrecked Cyprus's offshore financial haven status, money was
oozing out of his country's closed banks.
I'm writing this brief
explanation for those who are unsure about the status of deposits held in UK outposts of Cypriot banks, and to confirm the
situation for people with deposits in Cypriot banks in Cyprus itself.
(joke) Cyprus – And, It’s Gone! – LOLFed
Cyprus Shows Trust in ECB Is Misplaced – View
/ BB
Megan Greene: Markets have weathered potential crises in Italy and Spain with surprising calm, secure in the knowledge that the ECB will save the day if needed. This was always a false assumption, as events in Cyprus have made clear.
Megan Greene: Markets have weathered potential crises in Italy and Spain with surprising calm, secure in the knowledge that the ECB will save the day if needed. This was always a false assumption, as events in Cyprus have made clear.
The Euro Is Not Going Away: Deal With It, Folks – EconoSpeak
The trick of imposing
much of the short term cost on Russians suspected of being criminals or at
least shady has just made it all that much easier. Now, of course, there will almost certainly
be a sharp decline in Cypriot GDP, just as in Greece and other victims. But Cyprus will not leave, and the euro will continue.
Gideon Rachman: In the
end, the Cypriots swallowed the bitter medicine. Facing national humiliation
and a bleak future many complain their small nation has been forced to succumb
to the will of a larger, merciless power – Germany.
UPDATE 47
The crisis in Cyprus not
only threatens the Cypriot economy, but might also undermine the country’s
relations with key partners and allies – europp
/ LSE
EU-sponsored auditors
have begun work in Cyprus. But their track record and the minimalist
scope of the survey give cause for concern.
One-off or precedent? – MacroScope
/ Reuters
Bailout Strains European Ties – WSJ
Cyprus Deal Preserves Euro but Sows Mistrust Between Continent's Haves,
Have-Nots
Cyprus Exit
of the Euro – Google
Docs
and what happened on
the 25Mar: both were very bad ideas (a presentation by Alexander Apostolides / European University Cyprus)
Michael Jarman: a
complete abuse of trust and not what the European Union is supposed to
represent.
Capital controls will put the euro at risk – Bruegel
The currency in Nicosia will no longer be worth the same as it is in
any other country
Saving Cyprus
Means Nobody Safe as Europe
Breaks Taboo – BB
Cypriot banks stay closed amid fears of bank
runs – euobserver
Investigators to charge those to blame – Cyprus
Mail
The council of
Ministers will appoint criminal investigators in the coming days with a “clear
and wide-ranging mandate” to find those responsible for bringing Cyprus to the brink, President Nicos Anastasiades
said last night.
We put ourselves in
the position from which there was no escape but this did not justify the
punitive nature of the bailout agreement imposed in the early hours of
yesterday. The medicine administered by the Eurogroup, on the recommendation of
the IMF and the ECB, is designed to finish off rather than cure the patient.
MORGAN STANLEY: Cyprus Is
No Longer A Full Member Of The Eurozone – BI
Cyprus might need more
financial help or even a restructuring of public debt at some point * As taboos
were broken, concerns of an eventual break-up of the Euro area are back on the
table * Europe still lacks a coherent strategy on how to share the burden of
adjustment and is still far away from overcoming the crisis, both economically
and politically * Investors likely to remain cautious
UPDATE 48
UPDATE 48
Cyprus,
Seriously – Krugman /
NYT
Desperate times call
for desperate measures. Cyprus should leave the euro. Now.
Cypriots braced for harsh banking curbs – The
Telegraph
Cypriots face
draconian controls over how they spend their money, use debit cards or access
their savings lasting beyond May as Cyprus tries to stop capital flight ahead of
inflicting major losses on depositors at the island’s biggest bank.
Russian Withdrawals Quantified As Cyprus
Central Bank Set To Expand Emergency Credit By Up To €3 Billion – ZH
UPDATE 49
UPDATE 50
UPDATE 49
Cyprus is on the verge
of an unprecedented financial experiment: imposing controls on money transfers
in an economy that doesn’t have its own currency.
Cypriots braced for harsh banking curbs – The
Telegraph
Cypriots face
draconian controls over how they spend their money, use debit cards or access
their savings lasting beyond May as Cyprus tries to stop capital flight ahead
of inflicting major losses on depositors at the island’s biggest bank.
No signs of more bank withdrawals in euro zone:
Dijsselbloem – Reuters
The head of the euro
zone group of finance ministers, Jeroen Dijsselbloem, said on Tuesday there
were no apparent signs of increased withdrawals of savings within the euro
zone.
Cyprus to shape future euro bank rescues:
Eurogroup head – Reuters
A rescue program
agreed for Cyprus will serve as a model for dealing with future euro zone
banking crises and other countries will have to restructure their banking
sectors, the head of the region's finance ministers said.
The Cypriot government
was willing to do anything to save its banking industry. Yet Berlin, driven by
a deep-seated fear of tax havens, sought the opposite. The resulting deal may
have driven a stake through the heart of the euro-zone's much ballyhooed
banking union.
EU lawmakers divided on compulsory bail-in for
savers – euobserver
EU lawmakers are
divided over whether large bank deposit holders should face compulsory levies
if their bank hits serious difficulties.
Capital controls and the Cypri-outlier – alphaville
/ FT
It seems to escape
everbody, but that doesn't make it any less true: people from Portugal to Spain
to Italy to Greece to Cyprus and Ireland are worse off today than they were
when they first adopted the euro. Moreover, their economies are all getting
worse as we speak and projected to plunge further… The only reason for Europe's
Mediterranean nations to remain in the eurozone and the EU will be bullying
from Brussels and Berlin. It's this bullying from the core, from those who
preach union above all else, which will be the undoing of the entire project,
but after a lot more pain of the same kind that now hit the Cypriots will have
spread north (the rot won't stop).
It is not yet too late to drop the idea of
capital controls in Cyprus – Bruegel
The Cypriot bailout: A catalogue of farce – Open
Europe
Despite suggestions
that the botched bailout in Cyprus was a total shock, in fact there were signals
of what was coming
Save the rich! – alphaville /
FT
What makes the
€100,000 sum so very special? And what are the consequences of creating such a
divide?
C3--Cyprus
Capital Controls--What to Look for – Marc
to Market
The purpose is to
allow as smooth of a restructuring of the two largest banks in Cyprus. This means there will likely be continued
limits on how much can be taken from bank accounts. In order to separate the
insured depositors, who in Cyprus 2.0 will be left whole, and the uninsured
depositors, the ability to move money between accounts will also likely be
limited. The important take away, though
is that these are not the kind of capital controls that are meant to address
the external deficit or impact cross border settlement as in the Target2
system. Only if capital controls venture into this area, will talk Cypriot euro
make sense
I predict a (Cyp)riot! – TradingFloor
Cyprus
Capital Control Details Revealed
– ZH
UPDATE 50
One Euro or Two? – Marc to Market
Via Credit Suisse: A euro is not a euro – ZH
A lot of it of course
is some sort of desire to "belong to Europe" and all that, which strongly influences
both Greece and Cyprus, and continues to attract such possible
joiners as Poland… While this devaluation might make it easier for Cyprus to recover several years down the road, that
recovery would indeed be several years down the road, and in the meantime there
would be a lot of pain
Moody's: Cyprus Euro Exit Risk Substantial – ZH
Moody's: Cyprus Euro Exit Risk Substantial – ZH
UPDATE 51
The punishment regime
imposed on Cyprus is a trick against everybody involved in this squalid saga,
against the Cypriot people and the German people, against savers and creditors.
All are being deceived.
Whether Cyprus
deserves its punishment or not, the people who run the eurozone should also be
held accountable when they mess up.
Are capital controls
nudging Cyprus towards a new currency?
Cypriots queued calmly
at banks as they reopened under tight controls imposed on transactions to
prevent a run on deposits after the government was forced to accept a stringent
EU rescue package to avert bankruptcy.
Cypriot banks reopen
with tight controls imposed on transactions to prevent a run on deposits after
the government was forced to accept a stringent EU rescue package to prevent
the country from going bankrupt.
In sum, compared to
the initial proposal that taxed insured deposits while leaving more junior
creditors untouched, the final deal gets the creditor prioritization right,
hits uninsured deposits at the two top banks hard while leaving insured
depositors untouched, and gives the government broad powers to restructure
banks and impose capital controls…Still, the contagion to investors elsewhere
is likely to be significant.
Cyprus has imposed temporary capital controls. This column sheds light on how
temporary and how damaging they are likely to be, based on Iceland’s
experience. The longer controls exist, the harder they are to abolish.
Icelandic capital controls, which have been ‘temporary’ for half a decade,
deeply damage the economy by discouraging investment.
Is The Collapse Of Cyprus Due
To This Man? – ZH
Laiki Bank's chief
risk officer Dimitris Spanodimos represents the tip of the spear of mass
delusion that encompasses most (if not all) of Europe.
What happened in Cyprus – Free
exchange / The Economist
Cypriot banks re-open without panic – euobserver
Europe has long been far too tolerant of moral hazard
in its banking system. But with the Cyprus plan, the pendulum may now be
swinging too far in the opposite direction.
http://www.bruegel.org/nc/blog/detail/article/1063-with-cyprus-europe-risks-being-too-tough-on-banking-moral-hazard/
Should Cyprus drop
the euro? Here's what they have to gain--and lose – Wonkblog
/ WP
Did Cyprus Set
a Dangerous Precedent? Some Further Thoughts – PIIE
Just 24 hours ago
Cypriots were told curbs to prevent money from leaving the country would only
be in place for a week
What happened in Cyprus – Free
exchange / The Economist
An interview with
Athanasios Orphanides
Oooops... – ZH
After reading this
memo from the Central Bank of Cyprus sent to bank CEOs on February 11, arguably to
put them at ease, all we can say is "Oooops"...
Big depositors in Cyprus's largest bank stand to lose far more than
initially feared under a EU rescue package to save the island from bankruptcy,
a source with direct knowledge of the terms said on Friday.
World markets have
reacted calmly to the twists and turns of Cyprus's financial rescue in the last fortnight but
many investors fear the economic fallout is yet to come.
In the end it was
hardly even a stroll, let alone the widely predicted run on the banks of Cyprus.
Cyprus
controls an “omnishambles” – Hugo
Dixon / Reuters
The lesson of capital
controls elsewhere is that, once they are imposed, they are hard to remove. Iceland’s curbs are still in place five years after
they started. In Argentina, they lasted a year.
The Cypriot deal: Second time unlucky – The
Economist
UPDATE 52
Bank of Cyprus’s Customers May Lose as Much as
60% on Deposits – BB
Customers will have
37.5 percent of their deposits above this amount converted into shares with
full voting rights and access to any future Bank of Cyprus dividend, the
Nicosia-based central bank said in an e-mailed statement. A further 22.5
percent will be temporarily withheld to ensure the lender meets the terms of
its recapitalization, as agreed under Cyprus’s loan agreement with
international creditors, the central bank said.
25 Lessons From The Cyprus 'Deal' – ZH
Trade Prospects for Cyprus – EconoSpeak
UPDATE 53
Political Fallout Begins: Former Cyprus
President Named In Loan Write-Offs Leading To Banking Insolvency – ZH
The Seven Broken Taboos Of The Cyprus Deal – ZH
A failure of compassion – Coppola
Comment
None of this is true.
There is no justice in the Cyprus deal. Everyone in Cyprus, and many people in other countries, will pay
- for what is in fact a sovereign bailout.
President braves wrath
of Orthodox church by including plan to lift ban on gambling among his
initiatives to rescue economy
UPDATE 54
UPDATE 54
List Released With 132 Names Who Pulled Cyprus
Deposits Ahead Of "Confiscation Day" – ZH
For Cyprus, The
Pain Is Only Just Starting – ZH
Today, a draft of the
revised Cypriot MOU being prepared by the head of the IMF mission to the island
nation, Delia Velculescu, leaked and can be found in its 24 page entirety here.
Cyprus
Seeks More Time to Meet Targets in Talks With Troika – BB
UPDATE 56
UPDATE 55
Cypriot deal is welcome change to EU approach – euobserver
Despite its dangers,
the EU's new bail-in model will make it easier to deal with potential problems
in Italy or France and reduce moral hazard.
Bailout paper gives Cyprus four
years to balance budget – euobserver
The 24-page Memorandum
of Understanding (MoU) published in Cypriot press on Monday (1 April) sets out
a detailed programme of reforms including tax rises, spending cuts,
privatisation of state assets and healthcare and pension reforms.
Cyprus
Finance Minister Resigns – ZH
Cypriot Finance Minister Michalis Sarris
Resigns – TIME
Cyprus
finance minister quits, capital controls partly eased – Reuters
Cypriot Finance
Minister Michael Sarris quit on Tuesday after concluding talks with foreign
lenders on a bailout that forced the island to slap unprecedented losses on
bank depositors in return for aid.
Cypriot finance minister resigns as inquest
into crisis begins – euobserver
Life after the Fall: The Aftermath of the
Cypriot Banking Collapse – Spiegel
Cypriots are paying a
high price for the collapse of their banking system. A leading lawyer, a real
estate broker and a bar owner have already begun the process of searching for a
future -- for themselves, their companies and their country.
Cyprus
Finance Minister Sarris Quits After Brokering Rescue – BB
Cypriot Finance
Minister Michael Sarris quit amid a probe into the island nation’s economic
crisis, leaving the government eight days after helping it clinch an
international bailout to stave off financial collapse.
UPDATE 57
UPDATE 57
A turbulent Easter in Cyprus – Open
Europe
IMF Reaches Staff-Level Agreement on a €1
Billion Extended Fund Facility Arrangement – IMF
Cyprus
faces an economic catastrophe even worse than that inflicted on Greece – qfinance
In defence of Cyprus – Cyprus Mail
Did Putin Sink Cyprus? – NYT
Europe, it turns out, is studded with vulnerable,
contagious tax islands, and their availability only compounds Russia’s deeper problem: it is both too corrupt and
too paranoid to keep its billions at home.
Embattled Cypriot
finance minister Michalis Sarris quit immediately after talks to iron out
details of the island's €10bn bail-out concluded on Tuesday, having spent just
five weeks in office.
UPDATE 58
UPDATE 58
Statement on Cyprus – IMF
by Olli Rehn and Christine Lagarde
The Cyprus
crisis has shown the growing dysfunctionality of the eurozone – Europp /
LSE
Guest post: Cyprus,
when EMU broke and trust was undermined – alphaville
/ FT
The ‘Cypriot
precedent’ and experiment with capital controls, a first for the eurozone, are
still reverberating around the EU. Gilles Thieffry, a Partner at GTLaw, Geneva,
writes on possible legal implications.
UPDATE 59
Cyprus
Turks Share Pain as Banking Crisis Revives Talk of Unity – BB
UPDATE 60
UPDATE 64
UPDATE 65
UPDATE 60
Cyprus:
Hope Trumps Reality – CFR
Numbness gives way to anger in Cyprus over
bailout – Reuters
Public shock in Cyprus about the tough terms of an international
bailout is turning into anger as millions of euros remain locked in the
country's banks.
Eric Sprott's April Commentary: Caveat
Depositor – market
folly
Eric Sprott of Sprott
Asset Management is out with his April commentary entitled, "Caveat
Depositor." In it, he delves into
the Cyprus situation and the macro effects moving
forward.
Where will Cypriot growth come from? – Open
Europe
UPDATE 61
UPDATE 62
UPDATE 61
Former chief executive
had ‘wiping software’ on his computer, investigation reveals
NEW: Leaked reports on why Cypriot banks sought
state help – Cyprus
Mail
In continental Europe, we are witnessing the rather extreme outcome
that results from having the provision of liquidity divorced from an ability to
regulate banks…
The euro-zone bailout
of Cyprus exposed deep divides within Europe and also brought back the specter of the euro
crisis. In addition to harming the island nation's economy, errors made in
negotiating the deal will ultimately be a setback to strategic EU interests as
well.
UPDATE 62
Cyprus Can
Save Itself by Fleeing the Euro
– View
/ BB
Cyprus
Losses Spur EU Lawmakers to Bolster Depositor Protection – BB
The European
Parliament will seek greater protection for depositors of crisis-hit banks in
the wake of the Cyprus bailout as it weighs changes to proposals aimed at taking taxpayers off
the hook for future rescues.
UPDATE 63
Some post-Cyprus thoughts
from Citi’s Buiter et al… first on rolling capital controls and the chances of
a new Cypriot pound being forced into existence (full paper)
Why Cyprus must
leave the euro – Felix
Salmon / Reuters
Cyprus
Suspends Probe Into Who Withdrew Money Early – ZH
Here We Go: Cyprus To
Sell €400 Million In Gold, About 75% Of Its Total Holdings, To Finance Part Of
Its Bailout – ZH
Cyprus:
Oddities in leaked bailout documents – Brussels
blog / FT
UPDATE 64
The eurozone’s second sovereign restructuring? – alphaville
/ FT
Our colleagues at FT
Brussels Blog got their hands on the draft debt sustainability analysis for the
Cyprus bailout and bail-in — click for the full doc.
UPDATE 65
Cyprus: Not
Done Yet – CFR
More leaked Cyprus
documents: first tranche €3bn
– Brussels
blog / FT
EMU plot curdles as creditors seize Cyprus gold
reserves – The
Telegraph
Mario Draghi Orders Cyprus To
Sell Gold To Cover Bailout "Shortfall" – ZH
Draghi Says Any Cyprus Gold
Sale Must
Cover Emergency-Loan Loss – BB
Eurogroup Statement on Cyprus – Consilium
Europa (pdf)
The Gloriously Ballooning Bailout Bedlam Of Cyprus – Testosterone
Pit
Ten billion euros for Cyprus
bailout non-negotiable, Germany says – Reuters
The EU and IMF's 10
billion euro contribution to the bailout for Cyprus is non-negotiable, the German government said
on Friday.
Getting worse – Free
exchange / The Economist
The controversial
rescue of Cyprus moved a step closer to reality today as the Eurogroup of finance
ministers said that the European Stability Mechanism (ESM), the euro area’s
rescue fund, should give the go-ahead to financial assistance worth €9 billion
($11.8 billion) by April 24th.
Euro ministers back 10 billion euro Cyprus
bailout – Reuters
Euro zone finance
ministers backed a 10 billion euro bailout for Cyprus on Friday and the European Commission said it
would try to help the island's economy grow again with better use of EU
structural funds.
Ministers finalise €10 billion Cyprus
bailout – euobserver
Bailout Bargaining: Cypriot Shortfall Irks
German Conservatives – Spiegel
Euro-zone finance ministers are set to agree on a bailout package for Cyprus on Friday, but news
this week that the country will need to raise an additional 5.5 billion
euros has raised new questions. Germany's parliament is
likely to approve the aid, but many are calling for conditions to be imposed.
* * *
* * *
* * *