Καλημέρα σε όλους
Hugo Dixon, Editor at large at Reuters, has been doing an excellent coverage of the recent days’ events. Yesterday he wrote an excellent article and summary on his Twitter stream about some key issues and key questions, which are summarized below, regarding our position and going forward.
I decided to focus on these today.
A very good list-summary of our current situation following Sunday's Eurogroup decision
By Hugo Dixon
Editor-at-large at Reuters
@hugodixon on Twitter
The article: Cyprus deal-best of a very bad job
The summary:
Key considerations of the bailout
1 Cyprus deal makes best of a really bad job
2 Three important principles:
- no haircuts on insured deposits;
- bail in not bailout troubled banks;
- countries can't run big money laundries.
3 Two doubts:
- unclear what happening on capital controls;
- unclear whether debt really sustainable given Cyprus economy will be clobbered
Key questions going forward:
1. What will �10bn be used for since not for banks? Deficit and rollover of maturing debt? Does anybody have the split?
Overall program targets have shifted massively. new funding gap is way beyond 5.8bio given new imf forecasts. hence more revenue
New IMF forecasts not yet public, surely open ended bail-in gives scope to close any funding gap through recourse to further uninsured loss.
2. Do we know the size of uninsured deposits at Bank of #Cyprus? My back of envelope suggests e10bn.
3. Eurogroup says Bank of Cyprus shareholders and bondholders will make a "full contribution". Is this euphemism for wiped out?
4. Do we know size of bondholders in both Laiki and Bank of #Cyprus?
5. Will there be capital controls beyond freezing uninsured deposits of Bank of Cyprus after banks reopen? i really hope not.
6. bank of Cypru will have 9% capital ratio after recap. Is that Basel 3 fully-loaded or some other measure?
7. Will the Cypriot banking system will have enough collateral to fund a run when banks open?
ALSO READ by same author:
Cyprus must avoid capital controls - with specific suggestions
Cyprus: It’s not over yet
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