Capital controls an unpalatable option for Athens

February 10, 2015

The risk of a Greek euro exit increases the pressure for capital controls. The policy did less harm than expected in the Cyprus crisis, and would buy time for Athens and its international creditors. The snag is that Greece’s position is weaker, and the politics more toxic.

Greek deposits fly between a rock and a hard place

January 30, 2015

One remedy to capital flight would be to give so-called emergency liquidity assistance to Greek banks. But heavy use of ELA could mean big losses if Greece left the euro. The alternative is to copy Cypriot capital controls. That, though, would be politically toxic in Greece.

Bank of Cyprus is bank of choice for EU über-bulls

June 2, 2014

Half the loans of the last major Cypriot bank are in arrears. Two-fifths of its funding comes from central banks. Yet Bank of Cyprus may still be able to secure foreign capital after the EU stress tests, if needed. If so, that would mark a new high in tapering ebullience.

Cyprus’ bank bailout may not be the last

May 18, 2012

The euro zone minnow has committed to pump 1.8 billion euros, or 10 pct of GDP, into Cyprus Popular Bank if its second largest lender can’t raise it privately. This may just be a holding operation. If Greece quits the euro, Cypriot banks and the state itself will need more help.

Cyprus is the last of Europe’s baby bailouts

June 27, 2012

Cyprus said on June 25 that it would seek aid from euro zone partners to help recapitalise its banks and fund its economy. The bailout may total as much as 10 billion euros, according to two euro zone officials, Reuters reported on June 26.

Hugo Dixon: Cyprus deposit grab sets bad precedent

March 18, 2013

Money had to be found to prevent its financial system collapsing. But imposing a 6.75 percent tax on insured deposits is a type of legalised robbery. Cyprus should instead impose a bigger tax of about 15 percent on uninsured deposits and not touch smaller savers.

Europe’s bank-run defences have limits

March 18, 2013

The decision to hit insured depositors as part of the weekend’s Cypriot bailout could prompt those in Spain and Italy to take evasive action. If so, the ECB can deploy major liquidity assistance. But a really big run would test the willingness of central bankers to support its use.

Elusive future gas riches can’t help Cyprus now

March 20, 2013

Even if early estimates of huge gas reserves prove right, recent finds off the Mediterranean island’s coast will take time and money to exploit. The dicey politics of exporting gas from Cyprus also poses risks to development. For now, Cyprus’ natural gas potential remains just that.

Cyprus exit risk is real – and manageable

March 21, 2013

The European Central Bank has threatened to cut off Cyprus’ banks if Nicosia doesn’t take a bailout, potentially triggering a euro exit. The ECB has been pragmatic before, and will want the euro to stay intact. But an exit is manageable, and better than having the ECB buckle.

Cyprus will struggle to make gas math work

March 22, 2013

The struggling island is thinking about bundling future gas revenues into a fund to stave off financial collapse. But Breakingviews calculations suggest the recent discoveries off the country’s south coast won’t be enough to plug a 5.8 billion euro funding gap.