Cyprus´ Parliament
has postponed an emergency meeting on the controversial bailout deal for the
country´s banks, in which the public would have to pay a one-time levy fee of
up to 10%. Newly elected president Nicos Anastasiades stated that refusing the
bailout measure agreed by the EU and IMF would lead the nation´s banks to
collapse. However, on the streets the measure has sparked anger among Cypriots,
with thousands going to ATMs and withdrawing all of their savings. The measure
agreed by the international organizations tries to tackle a money laundering
problem by Russian nationals, which are believed to have most of their capital
in Cyprus banks. Opposition in both Germany and Cyprus claim that although the
measure is “a painful but controlled management of the crisis”, it is not socially
acceptable since it will put more stress on poorer families with lower savings,
and it did not represent the will of Cypriots as a people, which believe other
approaches could be more acceptable to prevent the “catastrophic scenario of disorderly
bankruptcy”.
IMF and European Central Bank have been under fire for their strict austerity measures imposed on EU's peripheral countries like Italy, Greece, Portugal and Spain. This looks like another one of such drastic measures that completely undermines financial situation of lower and middle income people in Cyprus. It seems that EU is not able to deal with the issue of money laundering by Russian nationals and as a result officials put policies that ultimately hurt people of Cyprus, while not resolving the main issue. I believe that while strict austerity measures that we see in Greece could be justified, the same approach is not acceptable in the case of Cyprus. The notion of people going to ATM's and withdrawing all their savings speaks to a disproval of the deal by people in Cyprus. It will be interesting to see how the opposition by Germany and Cyprus will play out in concluding the deal.
ReplyDeleteThis sounds like a disaster brewing in cypress. As people rush the banks this could create widespread panics and destroy the central banking system in Cypress. I believe we could potentially see fiscal disaster in the oncoming weeks as people continue to withdraw their funds in cypress. A rush on the banks could prove to be catastrophic.
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