[ExI] cyprus banks

[Anders Sandberg]

On 18/03/2013 05:29, spike wrote:
> I don't know what to make of this notion of Cyprus taxing bank deposits.  I
> would have never thought such a thing would even be discussed, for fear that
> it would cause immediate bank runs everywhere in Cyprus, starting Tuesday
> when they open, and rippling outward with Greece next, then Ireland,
> Portugal, Spain, possibly Italy.

Well, they are in a desperate situation. Their banks had bought a lot of 
Greek debt too, which turned out to be a very bad deal. Since Cyprus is 
not a large economy and probably don't have much other resources to use 
as a collateral for a bailout, it might make sense. It also happens that 
Cyprus is a pretty popular destination for people to put in suitcases of 
cash with no questions asked - there is a surprising number of anonymous 
Russian and other accounts there, belonging to people who has never set 
their foot on the island.

The bank run thing was already partially dealt with: apparently the 
banks placed the deduction in escrow during the weekend. Whether that 
will save them or not, we'll see.

Deep down, the real problem is that financial risk is conserved unless 
discharged. I remember a financially knowledgeable colleague point out 
during the height of the crisis back in 2008 that now governments had 
taken over the huge financial risks (and debts) from the private sector. 
Which didn't resolve the problem, it just moved it one step upwards. The 
eurozone crisis is that move coming home to roost, and the solution has 
partially been trying to foist the hot potato upwards - but there is 
very little upwards left now.

But, yeah, I am happy I have my accounts in non-euro money.

-- 
Anders Sandberg,
Future of Humanity Institute
Oxford Martin School
Faculty of Philosophy
Oxford University