The Corner

Cyprus: What Now?

Euro Intelligence sums up:

The parliament of Cyprus voted No to the troika proposal – 36 against, and 19 abstentions, not a single Yes vote. The consequences of the momentous decision are numerous. The government is now preparing to contain a bank run. The Wall Street Journal has the details this morning. The measures include to extend the bank holiday until next Tuesday (Monday is a bank holiday anyway). Other measures under consideration are daily withdrawal limits, additional caps on electronic transaction, delays in clearing, and strict border controls….

Michael Sarris, the finance minister, last night arrived in Moscow for talks with Vladimir Putin. Kathimerini reports President President Nicos Anastasiades also had a telephone conversation with Putin on Tuesday night. Specifically, the talks are about a deal with Moscow for the sale of Popular Bank of Cyprus, known also as Laiki, and possibly other banks. The article said the Russians will seek some form of compensation. A naval port in Cyprus for the Russian fleet and access to the country’s natural gas reserves are among the rewards Moscow might seek.

It is absolutely unclear how Russia and the eurozone could be both brought in. At this point it is impossible to speculate where this will end – all options are possible, from another, modified deposit tax, to a Russian takeover of the island, to a full default.

Immediately after the vote of the parliament the ECB issued a statement says that it would provide liquidity within the existing rules. That means no sudden withdrawal, as was threatened on Saturday morning, but also no new measures….

I note that the first name of the head of the Cypriot central bank is Panicos. How did his parents know?


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