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‘The mystery of Mario Draghi the Invisible Man is more disturbing in some ways. I posted about Schäuble briefing bigtime against him the week before last, and I now think it boils down to two serious possibilities. The first is that Berlin has somehow neutralised the ECB boss, and told him to stay out of public eye and leave it to them. If so, he has managed very well to be AWOL during a classic Brussels-am-Berlin cock-up. But even as the ECB demanded a Nicosia decision by Monday and then demanded more money after the Moscow talks broke down, SuperMario was nowhere to be seen. That is odd.

The second possibility – and one I increasingly favour – is that from the outset Mario Draghi saw Cyprus as a distraction, no more: he knows that via his control over the banking purse-strings, he can bring the island to its knees any time he likes. Either he knew (or guessed) that the Berlin mentality would jackboot into the situation and use it as a test-case for (a) future events where threats are felt to be necessary and (b) setting the precedent for State theft of depositor funds under the guise of bollocks like Open Bank Recontruction (OBR) or fantasy ‘levies’. Of course, he would prefer to be away from that grubby operation, but I return to the key word here – distraction: Germany’s aim is control; Draghi’s aim is the survival of the euro, whatever it might cost. The two need not be the same, and in the long term probably won’t be….Personally, I suspect what he plans to do adds up to yet another form of citizen pauperisation alongside the bank robbery approach…. in Frankfurt, Marketwatch opined as follows: ‘the precedents set by the Cyprus deal have undermined the euro in a very important way. The imposition of capital controls–a euro-zone first–now means that a euro held in a Cypriot bank account can’t be moved, withdrawn or even spent with the same ease as a euro held in a bank account in Germany, France or anywhere else in the 17-nation eurozone. Simply put, a “Cypriot euro” is worth less than a euro held in a bank account anywhere else".

The whole idea of EMU a nonsense: it is, in fact, the beginning of the end of EMU. In a client note after the true level of Cyprus haircut was announced, Deutsche Bank strategist George Saravelos wrote, ‘Economic and monetary union across the entire euro zone no longer exists. Even though [Cyprus] is very small, policy makers’ willingness to suspend cross-border euro convertibility is a meaningfully negative signal for the euro zone.’ The economics boffins at Nomura concurred: ‘Common currency, by definition, means that a euro in country A is equivalent to a euro in country B’ they wrote. UBS Head of Global Economics Paul Donovan told CNBC, “If you impose capital controls, effectively, the monetary union is dead.”. And perhaps most chilling of all, David Mann, Regional Head of Research for the Americas at Standard Chartered Bank says, “There is no point in anyone claiming they know what’s coming next. It’s [capital controls] gone from something hardly mentioned a week ago to something that is being taken absolutely seriously enough to be running into a real scenario. But it has to be instant. Bank runs can literally be electronic — they happen at a touch of the button.”