It is remarkable that in all the debate which is taking place over whether Cyprus should consider leaving the eurozone, there has been very little mention of the fact that the euro is basically the currency appropriate for Germany and Austria, and perhaps the Netherlands, but for none of the other 16 member states. This comes out clearly from the consideration of how the value of the currency has fluctuated since 2001... 7 comments

EUROZONE finance ministers will on Monday politically ratify the agreement reached at the technical level for the disbursement of Cyprus’ first tranche of €3 billion out of the €10 billion EU-IMF bailout loan.A senior Eurozone official said yesterday in Brussels that at the meeting on Monday there would be a first review of the course of the Cyprus aid programme, while a political decision on the disbursement of the first €3 billion would be taken.He also said that the priorities were clear and included the restructuring of banks and the gradual lifting of restrictions on capital movement.In response to a question, he said that there was no timetable for the full lifting of capital restrictions, “but the sooner the better”, he added.  ... 2 comments

SAVERS from other euro zone countries withdrew 18 per cent of the cash they held in Cyprus in February, amid concerns the island would impose a tax on bank deposits.Figures from the Central Bank released yesterday showed deposits from other eurozone states fell €860 million to €3.9 billion, making them the fastest category to leave the stricken banking sector.Deposits from non-eurozone countries actually rose, by less than 1 per cent to €21 billion, while deposits from local residents fell less than 1 per cent to €42.6 billion.Overall, deposits were down almost €1 billion to €67.5 billion. Overall outflows in February were considerably less than in January, when €1.73 billion left the island.Year-on-year (February 2012) deposits fell by 3.1 per cent... 4 comments

THE HANDLING of the Cyprus economic crisis by the Eurogroup of finance ministers highlighted that not all nations are equal in the eurozone where large nations’ interests come first, said Nobel economics prize winner Christopher Pissarides. In an opinion piece published in the Financial Times, Pissarides argued that the troika’s decisions on Cyprus were “baffling”, and made a “mockery” of the vision of the founding fathers of the single European currency.  The head of the advisory body to the president, the national economic council, noted that the troika believed Cyprus’ banking sector to be unsustainable because deposits were about eight times the gross national product. ... 9 comments

 LUXEMBOURG'S foreign minister accused Germany yesterday of "striving for hegemony" in the eurozone by telling Cyprus what business model it should pursue.Like Cyprus, Luxembourg has a large financial sector, whose comparatively light-touch tax and regulatory regime has long irked its much bigger neighbours Germany and France.Germany, the European Union's biggest and most powerful economy, had insisted that wealthy depositors in Cyprus' banks contribute to the island's bailout and said the crisis has killed a "business model" based on low taxes and attracting large foreign deposits... 3 comments

THE rescue programme agreed for Cyprus on Monday represents a new template for resolving eurozone banking problems and other countries may have to restructure their banking sectors, the head of the region's finance ministers said."What we've done last night is what I call pushing back the risks," Dutch Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup of eurozone finance ministers, said hours after the Cyprus deal was struck... 5 comments

MOST DUTCH think Cyprus should leave the eurozone even though the cost of a bail-out for the country would be tiny compared to the rescue for Greece, a poll published yesterday said.More than half those surveyed, or 56 per cent, thought Cyprus should leave, according to a survey by pollster Maurice de Hond.The results of the poll were published as Dutch finance minister and chair of the Eurogroup Jeroen Dijsselbloem prepared to meet other eurozone finance ministers to discuss a bail-out in Brussels. The poll also showed that a majority of supporters of Dijsselbloem's social democratic Labour party think Cyprus should be helped to avoid going bankrupt... 13 comments

BRUSSELS, March 24 (Reuters) - Cypriot President Nicos Anastasiades embarked on last-minute crisis talks with international lenders in an attempt to save the island from financial meltdown. The talks with EU, European Central Bank and IMF leaders in Brussels will be followed by a meeting of eurozone finance ministers, intended to help Cyprus meet a Monday deadline to avert collapse of its banking system and potential exit from the euro. Following are comments from officials and ministers ahead of the finance ministers' meeting:... 5 comments

NOBEL PRIZE winner Christopher Pissarides believes Cyprus should not accept the view it must cut its banking system by half simply because certain eurozone ministers think it’s a good idea. The head of the National Economic Council made the comment at The Economist’s conference in Nicosia yesterday. He noted, however, that given the stance adopted by the eurozone countries, imposing a bank levy on deposits appeared to be the best solution now available to Cyprus.  ... 24 comments

EUROZONE finance officials acknowledged being "in a mess" over Cyprus during a conference call on Wednesday and discussed imposing capital controls to insulate the region from a possible collapse of the Cypriot economy.In detailed notes of the call seen by Reuters, one official described emotions as running "very high", making it difficult to come up with rational solutions, and referred to "open talk in regards of (Cyprus) leaving the eurozone".The call was among members of the Eurogroup Working Group, which consists of deputy finance ministers or senior treasury officials from the 17 eurozone countries as well as representatives from the European Central Bank and the European Commission. The group is chaired by Austria's Thomas Wieser... 1 comment