Depositor defusal, Cyprus edition

Q. How do you approach a sleeping depositor in a Cypriot bank?

A. Very slowly: Read more

The eurozone’s second sovereign restructuring, confirmed

You can tell it’s the real deal on PSI because of the missing Troika member...

Statement by the European Commission and the IMF on Cyprus Read more

“Something to ponder while hoping for the best”: Cyprus and the IMF

Quite a lot to ponder really. Members of the IMF’s executive board were set to meet on Wednesday to discuss whether to approve lending to Cyprus, more or less behind closed doors.

But maybe not so much this time. It looks like Stockwatch in Cyprus has obtained a copy of the members’ comments on the Cypriot bailout — a rather high-level internal document to find its way to the public… and it makes for fascinating reading. Read more

The Polish-Cyprus case

Some might remember this banner from last year’s Russia vs Poland Group A match at the Euro 2012 tournament:

It was, to say the least, a little bit antagonistic. Read more

Cypriot banks, the Pimco report

Click to enlarge. Hat-tip to the FT’s Kerin Hope and Sigma TV:

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The eurozone’s second sovereign restructuring?

Please note the question-mark.

Our colleagues at FT Brussels Blog got their hands on the draft debt sustainability analysis for the Cyprus bailout and bail-in — click for the full docRead more

Of political power and dual-currencies in Cyprus

Some post-Cyprus thoughts from Citi’s Buiter et al… first on rolling capital controls and the chances of a new Cypriot pound being forced into existence (our emphasis):

The lack of internal convertibility of euro notes (through the limitations on cash withdrawals and on electronic payments) will, if they persist for more than a few weeks, likely lead to a search for alternative media of exchange for internal transactions. IOUs of large, respected enterprises could for example be countersigned and start to circulate more widely as media of exchange and means of payment. This was the case, for instance, during the 1970 bank strike in Ireland, uncleared cheques were made negotiable (like bills of exchange) and pubs and shops served as credit verifiers. These could later develop into more full-fledged parallel currencies, if internal euro liquidity in Cyprus remains very scarce.

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Cyprus, where the vicious circle stopped

In continental Europe, we are witnessing the rather extreme outcome that results from having the provision of liquidity divorced from an ability to regulate banks…

UBS analysts John Paul Crutchley and Alastair Ryan, 2009 Read more

Guest post: Cyprus, when EMU broke and trust was undermined

The ‘Cypriot precedent’ and experiment with capital controls, a first for the eurozone, are still reverberating around the EU. Gilles Thieffry, a Partner at GTLaw, Geneva, writes on possible legal implications.

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Alphachat: the cunning plan edition

Regular posting will resume on Tuesday. In this Easter edition of Alphachat, Joseph, Cardiff and David do their best to compare Jeroen Dijsselbloem to Baldrick before moving on to slightly weightier stuff. Read more

Depositing some calm, at least for the little guys

A small antidote to Messr Dijsselbloem if you will.

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Credibility

Tonight’s extra dollop of mind-bleach, fresh from the EurogroupRead more

Dijsselbloem, do remember that careless talk costs lives…*

…and it’s really about time it cost you your job.**

The Eurogroup head was in triumphalist form on Monday, claiming direct credit for having sent Cyprus into a parallel eurozone (capital controls, economy obliterated). Clock the direct quotes in this interview with the FT’s Peter Spiegel and Reuters’ Luke BakerRead more

CONTROLS continued, as is their wont

“If they don’t [impose them], it will be hell,” one government official said. “Everyone will be running to the banks to pull their money out. There’s a panic.”

That’s from the FT over the weekend. The “them” in question are capital controls which the bill passed by Cyprus on Friday gives politicians sweeping powers to impose (for the first time in euro-history). From the FT again: Read more

Did Russia lose at Russian roulette?

The deal of sorts that was struck to rescue Cyprus wasn’t without plenty of drama (the WSJ and Reuters say Cypriot president Nicos Anastasiades threatened to resign at one point). Cyprus’s leaders seemed keen to give Russians a good deal to the bitter end — as the FT notes, Bank of Cyprus, which is “particularly heavily laden with Russian deposits”, was the key sticking point:

The meetings, which broke down repeatedly, focused on Cypriot insistence that Bank of Cyprus survive the restructuring. Read more

Cyprus, the snap takes

We recommend you go straight to Joseph’s take and the Eurogroup statement if you haven’t already been there but, if you have, here’s some commentary from our inboxes:

From UBS’s Reinhard Cluse:

Looking beyond today’s deal, we would raise the following issues:

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Scratch one stupid idea [Updated]

Monday morning’s Eurogroup statement on Cyprus. You’ll want the details in the Annex.

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Here it is…

Ollie Rehn is speaking at Eurogroup press conference at pixel time; click the screenshot below of Djisselbloem to get to the live video feed:

Eurogroup press video screenshot Dijsselbloem  Read more

Intransigence in the face of Cyprus

The single currency, and financial markets generally, have been stubbornly stable in the face of the Cypriot mess (ongoing, obvs) and it’s not really clear why.

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CONTROLS (in Cyprus)

This is being reported as the capital control bill that’s close to being enacted in Cyprus (Greek speakers do please step in if needed) and a very welcome translated list courtesy of Yiannis MouzakisRead more

Cyprus – just pop the red pill, please

Kinda strange that markets should get all a-jitter just as the Cyprus crisis is moving towards a resolution.

Simon Derrick of BNY Mellon asked on Friday: “The red pill or the blue pill.” The answer — choose reality — seems pretty obvious, but let’s first run through Derrick’s handy re-cap…

What’s the problem?

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Taxi for Laiki

That’s Panicos Demetriades, Cypriot central bank governor, on national TV just a few moments ago. And there’s a Laiki banker next to him. He looks a bit unwell. Demetriades announced a “banking reform” bill that will guarantee deposits up to €100k, and put Laiki into resolution. Otherwise this bank’s a goner. Update – the only way this works, surely, is if uninsured large depositors are shoved to the bad bank and are left to try their luck on asset recovery.

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Of credible threats and plans

We compared the Eurogroup to an EM crisis talking shop earlier. Well, selected quotes from Eurogroup Working Group conference call notes, from Reuters:

“The (Cypriot) parliament is obviously too emotional and will not decide on anything, if Cyprus does not even feel that they can attend the call it is a big problem for us”

“We have never seen this”

“Markets believe that we will find a solution and that we will provide more money and this might not be the case”

Sorry to EM crisis talking shops. Read more

The Buchheit bat-signal, a few days on

OK, Felix already posted on this earlier. But in case you haven’t read Lee Buchheit and Mitu Gulati’s 3-page paper on Cyprus yet, we’d recommend reading it, or going back to it, given the likelihood of uninsured depositor flight whatever plan is now adopted.

We’re waiting for Plan B on Thursday. Meanwhile, various, erratic Hail Marys — Hail Vladimirs — were not looking good as Plan Bs as Wednesday closed. Read more

ECB starts egg timer on Cyprus ELA

From the ECB on Thursday morning:

PRESS RELEASE

GOVERNING COUNCIL DECISION ON EMERGENCY LIQUIDITY ASSISTANCE REQUESTED BY THE CENTRAL BANK OF CYPRUS

The Governing Council of the European Central Bank decided to maintain the current level of Emergency Liquidity Assistance (ELA) until Monday, 25 March 2013.

Thereafter, Emergency Liquidity Assistance (ELA) could only be considered if an EU/IMF programme is in place that would ensure the solvency of the concerned banks.

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A Cypriot game of chicken

After that resounding no vote, what’s in the stars for Cyprus today?

Martina Stevis and Michalis Persianis write in the WSJ that there are short term ideas — basically, Cypriot and European officials are discussing capital controls for when banks are due to open next Tuesday.

Meanwhile the IMF is coming up with a plan to merge Cyprus’ two biggest banks into a ‘bad bank’, a source told the pair. The IMF wouldn’t be drawn on that.

Where does the ECB stand in all this? Read more

You say nein, we say oxi [updated]

No: 36
Yes: 0
Abstain: 19

That’s the result of Cypriot MPs’ vote on the current version of the bank deposit levy, rejecting it as a condition of the island’s bailout. Note that the ruling party abstained. Still, that is the first no, after all these years and the bailouts, to the Troika. Read more

So, are they stupid?

To be perfectly honest, trying to second-guess Cyprus isn’t gonnna get us anywhere. The situation at pixel time was moving too fast at too great a distance. While we wait for a tiny bit of clarity — whether this evening’s vote on the bailout will go ahead is till unclear, let alone what the outcome will be — a question being asked by Credit Suisse’s William Porter and team seems apropos: What if they’re not “stupid”? Read more

Political blowback from Cyprus

The Game of Cyprus is still being played and the incredibly liquid situation could change in a matter of hours. It’s fitting really, given that it kicked off in similar mannerRead more

What did the ECB tell Cyprus?

The ECB’s role in this eurozone crisis/saga has been complex.

Yes, yay for Draghi with the OMT/whatever it takes and before that, the LTROs.

But there’s a couple of other niggles that have been highlighted, yet again, by the Cyprus ‘bail-out’. Read more