Co-organizer John Cotter and I are pleased to announce a superb line-up of speakers for the FMC2 half-day conference on bank resolutions mechanisms on Thursday, May 23rd at the Irish Institute of Bankers. To sign up for attendance at the conference, please contact Irene.ward@ucd.ie. Admission is free.
A genuine question, to which many reasonable answers are no doubt possible:
If this is the cost of leaving the Euro, then what is the opportunity cost of Cyprus leaving the Euro now?
(I mean the opportunity cost to Cyprus, not the rest of us, which is the only thing that should concern Cypriots in a union where it is every nation for itself.)
The Eurogroup statement following last night’s meeting on Cyprus can be read here.
Laiki bank is going to put into resolution with shareholders, bondholders and uninsured depositors taking the hit. The losses for depositors will be determined over the coming weeks but could be up to 40%.
Insured deposits of less than €100,000 will be moved to the Bank of Cyprus. Bank of Cyprus will be recapitalised via a debt-for-equity swap with bondholders and uninsured depositors. Junior bonds will be cut.
The official loans to be provided remain at €10 billion though no contribution from the IMF is currently in place. Some financial assistance from Russia is expected. Capital controls will be implemented.
This agreement does not require a vote in the Cypriot parliament and, although not confirmed, it is likely that the amount to be raised from the banking measures is greater than €5.8 billion. All insured deposits of less than €100,000 will be protected.
So how does Plan B compare to Plan A?
here.
papers here. Includes:
Portuguese Economic Slump Caused by the Large Capital Inflows that Came with the Euro
Clues as to What is Happening Europe-wide; Outlook for the Future is Grim
by Ricardo Reis
Over the past 12 years, Portugal has been in a severe economic slump—growing less than the US during the Great Depression and Japan during the Lost Decade—and that slump was mainly caused by the country’s inability to efficiently allocate the foreign capital inflows it received after joining the Eurozone in 1999, according to “The Portuguese Slump and Crash and the Euro-Crisis.” Because Portugal was one of the first countries where the symptoms of the sovereign debt crisis were initially identified, it can help macroeconomists understand what has been happening in Europe more broadly. Portugal did not have a housing boom like Spain and Ireland, nor as rampant an increase in public debt as Greece, nor does it have Italian political instability: yet, since 2010, all five countries have been in a similar crisis.