Posts Tagged ‘Cyprus’
“People have been comparing apples with pears and coming up with oranges,” EU Economic and Monetary Affairs commissioner Olli Rehn said patronisingly in the press conference after the Eurogroup meeting in Dublin last Friday, urging people not to rely on leaked documents. That was part of his response when he was asked how the Cyprus bailout went, within a matter of weeks, from a total of 17 billion euros – as was initially communicated – to 23 billion euros – as the leaked draft document of the financing aspects of the program revealed.
Catchphrases seem to be the only way that Olli Rehn can explain this discrepancy. Yesterday, he gave the same response in the session of the European Parliament where he was battered by MEPs over the handling of the crisis in Cyprus and the damage it inflicted on Cypriots.
The debt sustainability analysis (DSA) along with other documents related to the program for Cyprus was leaked today on the wires first by Reuters and then the actual documents were published in the Brussels blog of the FT.
The DSA is as expected based on massaging numbers and ignoring risks to arrive at a baseline scenario with a debt to GDP ratio that would give the troika the argument to call it sustainable and get everyone to commit to yet another EU bailout program.
Given the extent of the damage that was inflicted on Cyprus there is something that deserves at least a mention.
Here is what a cash economy looks like:
- Restrictions in daily withdrawals
- Ban on premature termination of time savings deposits
- Compulsory renewal of all time savings deposits upon maturity
- Conversion of current accounts to time deposits
- Ban or restrictions on non cash transactions
- Restrictions on use of debit, credit or prepaid debit cards
- Ban or restriction on cashing in checks
- Restrictions on domestic interbank transfers or transfers within the same bank
- Restrictions on the interactions/transactions of the public with credit institutions
- Restrictions on movements of capital, payments, transfers
- Any other measure which the Finance Minister or the Governor of Cyprus Central Bank see necessary for reasons of public order and safety
The bill here in Greek:
Here is the current state of play regarding today’s vote, information from various local sources:
Session starts at 4pm local (GMT+2)
Cypriot Parliament: 56 seats
Anastasiades party ΔΗΣΥ (DISI): 20 seats
ΔΗΚΟ (DIKO) (coalition party): 8
ΑΚΕΛ (AKEL): 19
ΕΔΕΚ (EDEK): 5
ΕΥΡΩΚΟ (EUROKO): 2
It was just one week after the repeat Greek elections and a few days before Cyprus would assume the rotating presidency of the European Union that the island was forced to formally request a bailout after the government stepped in to strengthen the capital base of Cyprus Popular Bank and Bank of Cyprus in order to meet the end of June deadline of core Tier 1 requirement set by the European Banking Authority.
For a number of reasons, Cyprus’ formal request for a bank bailout went under the radar. Cyprus represents less than 0.2% of the eurozone’s GDP and the amounts in question were negligible (initial estimates were in the region of a total of 10 billion euros) when compared to other countries’ bailout programs. Also, all eyes at the time were on Greece and nobody wanted to spoil the celebratory mood in Cyprus as it prepared to assume the EU presidency by making the bank bailout an agenda-topping issue. Spain had also requested bailout funds and was going through the same process of assessing the capital requirements of its own banks. Bank bailout aside, there was a general expectation, after a 2.5-billion-euro loan the previous year, that Russia would step in and help cover the financing needs of Cyprus that would plug the holes of the state budget.