News

Why Cyprus Is a Special Case

The Cyprus bailout deal is a big improvement over the first botched attempt. It doesn’t repeat the error of breaching the guarantee on bank deposits up to 100,000 euros. Instead, it restructures the two biggest banks and forces their creditors, including large depositors, to take huge losses.

Yet the euro area’s leaders must do a lot more to convince Europeans and the markets that they have drawn the right lessons from this debacle. They need to say clearly why Cyprus is an exception and commit to integrating the euro area further so that it’s less vulnerable to such crises. They’re failing on both points.

March 26  – John Woods, Hong Kong-based chief investment strategist for Asia Pacific at Citigroup Inc.’s private bank, talks about the economic impact of Cyprus’s banking crisis on the rest of Europe. He speaks with Susan Li and Rishaad Salamat on Bloomberg Television’s “Asia Edge.” 

March 26  – Philippe D’Arvisenet, chief global economist at BNP Paribas SA, talks about Europe’s sovereign debt crisis and the outlook for the euro. Cyprus dodged a disorderly sovereign default and unprecedented exit from the euro by bowing to demands from creditors to shrink its banking system in exchange for 10 billion euros ($13 billion) of aid. D’Arvisenet speaks in Singapore with Haslinda Amin on Bloomberg Television’s “On the Move.”

The head of the euro area group of finance ministers, Jeroen Dijsselbloem, appeared to draw all the wrong conclusions in a March 25 interview, after the new deal was struck. He suggested that the Cyprus pact offered a new template for resolving the debt crisis.

Under this new model, the burden of repairing banks would shift from taxpayers to private creditors. Specifically, Dijsselbloem said he hoped the new approach meant that the 500- billion-euro European Stability Mechanism would never be used to directly recapitalize banks.

Get free important share market ideas on stocks & nifty tips chart setups, analysis for the upcoming session, and more by joining the below link: Stock Tips

Are you looking for NSE paid calls? Want to get premium trading alerts and unlimited access to Moneymunch? Join today and start potentially multiplying your net worth: Premium Stock & Nifty Tips

Premium features: daily updates, full access to the Moneymunch #1 Rank List, Equity Research Reports, Focus List portfolio of 50 longer-term stocks, Premium screens, and much more. You will quickly identify which stocks to buy, which to sell and target today΄s hottest industries.

Have you any questions/feedback about this article? Please leave your queries in the comment box for answers.

Previous ArticleNext Article
Moneymunch's editors' staff. They have been writing/working on the financial markets for over two decades, having previously worked with popular financial blogs and newspapers.

Write a Comment

Comment Policy: We love comments and appreciate the time that readers spend to share ideas and give feedback. However, all comments are manually moderated and those deemed to be spam or solely promotional will be deleted. Your email address will not be published. Required fields are marked *

//
//
Live Chat
< 4 min wait
//
Get a callback
<10 min wait

Chat with us on WhatsApp

Send this to a friend