Bruton, John, (2013), “Cyprus … A Test Case for Future European Banking Policy”, The Centre for European Policy Studies, 21 Μαρτίου. In this CEPS Commentary, the former Irish Prime Minister calls the precedents being set in the Cypriot banking case “troubling” and reflective of a lack of clarity and consistency of thought by both the eurozone Finance Ministers and the European Commission. He welcomes the rejection of the deal by …Read More
Rolling the Dice in Cyprus
Mody, Ashoka, (2013), “Rolling the Dice in Cyprus”, www.project-syndicate.org, 21 Μαρτίου. The task was never going to be an easy one: impose losses worth about €5.8 billion ($7.5 billion) on lenders to the Cypriot government and depositors with the country’s banks. And now that effort has led Europe to its latest impasse. In marathon negotiations, the Cypriot government, under the supervision of the troika (the European Commission, the European Central …Read More
Russia to the Rescue? Why Moscow May Bail out Cyprus
Aslund, Anders, (2013), “Russia to the Rescue? Why Moscow May Bail out Cyprus”, The Peterson Institute for International Economics, 21 Μαρτίου. 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 …Read More
Cyprus May Be a Turning Point in the Eurozone Crisis
Elliott, Douglas, (2013), “Cyprus May Be a Turning Point in the Eurozone Crisis”, Brookings Institute, 20 Μαρτίου. One way or another, the situation is Cyprus likely marks a major turning point in the eurozone crisis. It could be the beginning of true disaster for the zone, eventually leading to a series of sovereign debt defaults and possible exits from the euro area. It could also be the point at which …Read More
Walking back from Cyprus
Gulati, Mitu, Buchheit, Lee C., (2013), “Walking back from Cyprus”, www.voxeu.org, 20 Μαρτίου. 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.
Cyprus is different
Annunziata, Marco, (2013), “Cyprus is different”, www.voxeu.org, 20 Μαρτίου. 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 …Read More
Europe’s Lost-and-Found Decade
Eichengreen, Barry, (2013), “Europe’s Lost-and-Found Decade”, www.project-syndicate.org, 19 Μαρτίου. Sentiment in European financial markets has turned. For the moment, the possibility of a Greek exit from the eurozone is off the table. If interest-rate spreads on Spanish and Italian government bonds are any guide, bondholders are no longer betting on a eurozone breakup. European stocks even rose in the week following last month’s inconclusive Italian elections. Investors evidently believe that …Read More
Cyprus deal: the right intentions but major flaws
Darvas, Zsolt, (2013), ‘Cyprus deal: the right intentions but major flaws’, www.bruegel.org, 18 Μαρτίου. On Saturday morning, after a marathon meeting of the Eurogoup, it was decided to impose a one-time wealth tax on deposits in Cypriot banks: 6.75% on deposits below €100,000 and 9.9% on deposits above this threshold. Involving depositors was a wise decision and a wealth tax is a mild form of bailing-in, as I argued in …Read More
Cyprus: The next blunder
Wyplosz, Charles, (2013), ‘Cyprus: The next blunder’, www.voxeu.org, 18 Μαρτίου. 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 …Read More
What is Italy Saying?
Stiglitz, Joseph E., (2013), “What is Italy Saying?”, www.project-syndicate.org, 4 Μαρτίου. The outcome of the Italian elections should send a clear message to Europe’s leaders: the austerity policies that they have pursued are being rejected by voters. The European project, as idealistic as it was, was always a top-down endeavor. But it is another matter altogether to encourage technocrats to run countries, seemingly circumventing democratic processes, and foist upon them …Read More