Véron, Nicolas, (2013), “Europe’s Cyprus blunder and its consequences”, www.voxeu.org, 25 March.
The Monday morning Eurozone Cyprus bailout is now public, although details are scant. This column argues that this package cancels out some of the mistakes in last week’s package. Last week, the Troika should have vetoed the small-deposit tax and prepared a plan B for the Cypriot parliament’s rejection. Avoiding the risky scenario of a Cyprus exit will require further fiscal commitments from Eurozone partners. One possibility is a temporary, but EZ-wide, ‘deposit reinsurance’, or backing of national deposit-guarantee schemes by the ESM.