Abstract
The Cypriot banking system has suffered a severe blow last Friday night, after the results of the Eurogroup meeting were announced. Life in the banking system is different since Saturday morning: solutions that were feasible until last Friday (e.g. bank resolutions) might not be feasible this week due to capital flight risk. Moreover, the economics profession perhaps owes some gratitude to Cypriot parliamentarians who, on Tuesday, rejected a bailout package that would impose a levy on both insured and uninsured deposits. Insured deposits are sacrosanct in developed financial markets and breach of that trust is the main error the Eurogroup committed last Friday. We offer a proposal for the resolution of the crisis in Cyprus that provides a solution minimizing the losses to the banking sector and the economy in general, under the current circumstances.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.