Policymakers in the single currency area were at loggerheads on Tuesday over the long-term implications of the Cyprus bailout and whether savers across Europe will be exposed to raids on their bank accounts in future rescues.
The European commission and influential MEPs involved in drafting new laws on resolving bank failures confirmed that the proposed rules would include "bail-ins", which are favoured by Germany and would see investors and savers taking the hit instead of taxpayers.
But eurozone central bankers contradicted the signals from Brussels, insisting that the formula agreed for Cyprus on Sunday would not be applied uniformly in banking crises in other countries. Slovenia may be the first to find out as anxiety mounts that the country faces a worsening bank crisis that may necessitate eurozone intervention within months.
Cyprus's central bank, meanwhile, announced that savers with more than €100,000 (£85,000) in Bank of Cyprus, the island's biggest lender, would lose 40% of their savings as part of the radical restructuring and downsizing plan agreed by President Nicos Anastasiades and eurozone leaders in Brussels on Sunday. The losses to savers comes on top of the wipe-out of €4.2bn of deposits at Laiki or Cyprus Popular, the country's second bank which is being closed down and its good assets transferred to Bank of Cyprus.
The controversy over having savers and investors foot the bill for bank failure erupted on Monday when Jeroen Dijsselbloem, the inexperienced Dutch finance minister who has been chairing the eurogroup committee of finance ministers for two months, said that the Cyprus model would be extended to other countries and situations to avoid the injustice of having taxpayers shell out for the risky behaviour of bankers.
7 comments:
Where is the money going? It is being transferred onto the balance sheets of bankrupt banks from the taxpayers. Banks then use it hike their salaries repair their pension funds. Then the attempt to repair and cover up for their disastrous lending practices.
They starve the real economy of working capital. It was decided in the European looney union that every banks was too big to fail. Now they have decided to let whole countries go to the wall because their banking policies were another disaster. Hans Werner Sinn suddenly copped that the obligations of the top 6 debtor countries is over 8.3 trillion. The gloves are off and now they are in confiscatory mode not just hitting bond holders but large depositors who are going to have to flee very fast if they are to escape with their wealth.Make you laugh when you see Osborne, in the middle of all this, trying to buy the next election taking people for complete fools by handing them loans they would otherwise be able to afford. People should consider that act of treachery as tantamount to being handed a long length of rope with which to hang themselves and their families. Forget Osborne and his ilk, keep saving and you will get them for the price of your savings in due course.
It really is annoying reading comments from people who clearly don't know what they're talking about!!!
All the EU countries you list above joined the EU after 2000. In accordance with the EMU rules any country joining the EU after 2000 must within 7 years adopt the Euro as its currency!!!
As regards the tiny countries you mention - Monaco used the French Franc so they had to use the Euro as the French Franc ceased to exist!!! San Marino - Italian Lire! Same for Vatican city and Andorra?? Of yes Spanish currency!!!
Try learning some history and facts!!
Despite an ongoing financial maelstrom, the euro hasn’t yet lost a single member, and indeed is continuing to add them. Estonia joined last year, Latvia enters next year and Romania the year after. Meanwhile Monaco, San Marino and Vatican City have concluded agreements allowing them to use it as their official currency. Similar arrangements come into force for Andorra soon. Bulgaria operates a currency board with the euro, while Kosovo and Montenegro have unilaterally adopted it without even being members of the EU"
Premier Donald Tusk also wants Poland to join the Euro in time.
The demise of the Euro is just wishful thinking by commenters in the DT.
I doubt that it is Cyprus contagion which is affecting Slovenia's bank crisis and it won't stop the forward march of the Euro.
I doubt that it is Cyprus contagion which is affecting Slovenia's bank crisis and it won't stop the forward march of the Euro."
Unfortunately the destination increasingly looks like oblivion. Whilst the "euro hasn't lost a single member", more of them are going on life support and the queue for intensive care looks like growing. Whilst attention is on the eastern Mediterranean, things seem to be suspiciously quiet about Spain. Looking around I found the following article -
http://www.csmonitor.com/World...
As they say, truth is the first casualty of war and, if the story is correct, it looks like the Spanish media have been brought well and truly under control.
The Cypriot government has warned that banking curbs to prevent money from leaving the country will apply for longer than expected, in a blow to the island's attempts to revive its paralysed economy.
The country's foreign minister, Ioannis Kasoulides, said the regime, including a limit on cash withdrawals at €300 (£253) per day, would last for "about a month" – just 24 hours after the population was told they would only be in place for a week. The capital controls, the first ever to be imposed on a eurozone member state, have been introduced to prevent a cash exodus that would destroy what is left of the Cypriot banking system.
Kasoulides said: "A number of restrictions will be lifted and gradually, probably over a period of about a month according to the estimates of the central bank, the restrictions will be lifted."
"This is what the European “project” does to politicians: it puffs them up
with their own sense of self-importance to the point where they can no
longer think straight."
It's even worse in France.
Newly elected French Presidents go insane and think they're Louis XIV within weeks of being elected.
That's what happens when you move into a palace and are waited on by bowing and scraping liveried servants.
The more I think about this the more I realise they have created another Lehman moment. He is right, they never fined the banks a single euro and never indicated that there was any problems and then they came and as he said, detonated a bomb under the whole financial system of the country. They might yet discover that the shock waves from this detonation travel a lot farther and are a lot stronger than their glib analysis tells them.
They have changed the rules and people with money are going to find safe havens. It may take them a few weeks but they know they must act. What we are going to see is not just a very deliberate slow and strong run on the Piigs banks but all EZ banks.
This is going to be good for sterling which again is going to benefit from safe haven and flight to safety (relative). At least the UK has and can use monetary policies without having to consult the tower of Babel which is the EZ 17 whose catch cry ultimately is "All for one and none for all."
Yes Europe published stress test results in July 2011 and there were no Cypriot banks on the fail list. Arguably their problems occurred to some extent after that time with Greek bond issues etc,but nevertheless it really makes you wonder if those tests were of any value whatsoever except of course as part of their kicking the can strategy for the markets.
Really the govt bodies delight in kicking the shit out of bankers,but the reality is they the political bureaucrats are a disgusting excuse for people to follow who value their integrity.
There appears to be no limit to the dissembling they will indulge in to cling to their personal ideology/goals. No human cost appears that high it isn't worthy of sacrifice in pursuit of same.
My daugther browsing a University prospectus saw a course with a title European Studies etc ....I told her to concentrate on something that had a future.
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