News update 21/03/2013
Καλημέρα σε όλους.
No major updates at the time of this writing. International news sources are just recapping the impasse we have reached from yesterday and offer their opinions on Plan B, C, D ….
Cyprus scrambles to avert meltdown, EU threatens cutoff
Cyprus considered nationalizing pension funds and ordered banks to stay shut till next week to avert financial chaos after it rejected the terms of a European Union bailout and turned to Russia for aid.
Medvedev lambasts EU over Cyprus levy
Attached
Cyprus banks shut until Tuesday amid scramble for Plan B
Bank mergers, a bond issue and more Russian funding have all been mentioned as ways to help the country out of the crisis.
The establishment of a "bad bank" which would take on risky assets held by Cypriot banks has also been mentioned by officials.
Reuters Insight: Desperate for bailout, Cyprus plays risky geopolitical game
Cypriot policymakers hope they can begin to monetise as yet undeveloped offshore gas fields and position themselves as a vital source of energy for Europe.
However, such income is still years away and delusions of becoming the Qatar of the eastern Mediterranean in the 2020s may prompt Cyprus to overplay its hand now.
So far, some 200 billion cubic meters of natural gas worth $80 billion at current prices have been discovered in the Aphrodite gas field in Cypriot waters, although the figures still have to be audited.
DEUTSCHE BANK: Here's Why The ECB May Not Rescue Cyprus
"The provision of ELA funding is normally conditional on the receiving banks remaining intrinsically solvent," says Moec. "With the prospect of a bank run starting immediately after the expiry of the bank holiday, this condition hardly holds."
Cyprus crisis: The four scenarios
From FT - attached
How pulling the plug on ELA makes Cyprus systemic for the Eurozone - attached in Word
So bottom line? Here's what happens:
So some mixture of non-EU money, a substitution of austerity promises for immediate levy cash, terming out and locking in of large foreign depositors would seem to be the intersection set of all interested parties, while eliminating the levy on small deposits and the need for the OED to add a new definition for ‘deposit guarantee’. So as bad as it looks now, both the US and the euro zone have been down rehearsed this piece of theatre in the past.
European Commission statement on Cyprus 20/03/2013
German bonds are cheaper because of Cyprus crisis
Germany's creditworthiness is rated by all major rating agencies with the top AAA rating. Investors are therefore willing to give up for safety on return. The flight of investors in German government bonds brought Finance Minister Schäuble an interest saving of at least € 15 billion, gave calculations of the Kiel Institute for the World Economy (IfW) for the Reuters news agency. This so-called "safe-haven" effect is likely to be even higher, the longer the euro debt crisis.
Cyprus: Just The Facts
A 13pg overview of how we got here from the International Institute of Finance - Attached
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