This article talks about the possibility that Cyprus might have to sell some of its gold reserves to help fiance this bailout. Cyprus would have to sell about 400 million euros worth of gold , this comes after all the savings above 100,000 in banks have been tapped. Cyprus currently holds 13.9 tones of gold and if did have to raise that 400 million euros worth of gold it would account to about 10.36 tons of gold. Even with this bailout it is expected that the Cypriot economy would shrink by 8.7 %.
If these reports are correct then this would be the biggest bullion sale by a euro zone central bank since France , sold about 17.4 tonnes in the first half of 2009.
http://www.bbc.co.uk/news/business-22106187
If these reports are correct then this would be the biggest bullion sale by a euro zone central bank since France , sold about 17.4 tonnes in the first half of 2009.
http://www.bbc.co.uk/news/business-22106187
The current situation in Cyprus isn't looking good. It looks like this bailout is the only thing they can do to save what is left of their economy. Time can only tell if this will work.
ReplyDeleteCyprus is definitely in a very tenuous position right now. This also shows how important gold reserves can be as an insurance policy if an economy collapses like in Cyprus.
ReplyDeleteThe bailout has to happen and it will not be a success if its citizens are not in support of it. These are tough times and it is really hard for the citizens to take some hits in their accounts and the selling of the gold reserves just exemplifies how bad the situation really is.
ReplyDeleteYou know a country's situation is beginning to get dire when they're forced to begin selling their gold reserves. And it's a very large amount of gold, at that. Even after the bailout is done, Cyprus will still be in turbulent economic waters for a while as their economy shrinks in the aftermath.
ReplyDeleteGiven the harsh measures that Cyprus has had to take in order to save itself, it's no surprise that Cypriot citizens are upset. But at this point, it really seems as though there are no real options left than for them to use all means to manage this bailout.
I totally agree with Arjun. It seems as if Cypresses boat is sinking, and it will take a lot of time, money and effort to cover the sinkholes to keep it from drowning.
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