Davíðsdóttir, S. (2015) “Cyprus and Iceland: a tale of two capital controls“, A Fistful of Euros – European Opinion Blog, 06 Μαρτίου.
Both in Cyprus and Iceland foreign funds flowed into the islands, in the end forcing the government to make use of extreme measures when the tide turned. These measures are normally called ‘capital controls’ which in these two cases hides the fact that the measures used are fundamentally different in all but name. In Iceland, the controls contain the effect of lacking foreign currency, effectively a balance of payment problem – in Cyprus, the controls were a way of defending banks against bank run, i.e. preventing depositors to move funds freely.
It is a sobering thought that two European countries now have capital controls: Iceland and Cyprus; sobering for those who think that in modern times capital controls are only ever used by emerging markets and other immature economies. Cyprus has been a member of the European Union, EU, since 2004 and part of the Eurozone since 2008; since 1994 Iceland has been member of the European Economic Area, EEA, i.e. the inner market of the EU. – The two EEA countries were forced to use measures not much considered in Europe since the Bretton Woods agreement.
Σχετικές αναρτήσεις:
- Michaelides, Al., (2014), “Cyprus: from boom to bail-in”, Economic Policy, Vol. 29, Issue 80, pp. 639-689.
- Hardouvelis, Gikas (2014), “Overcoming the crisis in Cyprus”, Economy & Markets, Vol. IX, Issue 1.
- Thorhallsson, Baldur, Kirby, Peadar, (2012),‘Financial Crises in Iceland and Ireland: Does European Union and Euro Membership Matter?’, Journal of Common Market Studies, Vol. 50, Issue 5,p.p. 801–818.