Wednesday, March 20, 2013

So Cyprus did present other plans

Well, as was to be expected: Cyprus did offer several other plans, how to reach the needed amount without gutting deposits at all. As Spiegel online reports none of those were even considered by the finance ministers and the Troika. Also with Russian help Cyprus expects to come up with a plan to leave deposits below 100.000 € unaffected. Sometimes it pays off to be a cynic.

Cypriots don't seem to like Mondays, next week there will be another holiday. All banks being closed until Tuesday will affect companys. It won't affect confidence in banks though, since it just cannot get worse. The people can get some money so they won't be all cash-strapped.

Still, there are only rumors over a Russian involvement as of now, so we don't know if there is a viable plan B. I think some of the banks will not survive this though. Cyprus has to take steps to regain some confidence in the banking system. Mergers and a bad bank might help. Also the current owners have to be wiped out. A new bank under new management will have the chance to survive. The FDIC can handle this in such a short timeframe. So I hope this could be a first case where the ECB steps up to that.

Sadly a disorderly bankruptcy of the country is not off the table just yet. Tomorrow will bring some clarity as the president Anastasiades will then announce if he has a new plan and how it should work.

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