Alpha Bank’s Directory of Financial Studies has issued a special report detailing the developing situation in the Cypriot economy, following the Eurogroup decision of a “haircut”.
As stressed in the report, the Eurogroup decision will have a series of exceptionally negative developments in the financial sector in Cyprus, leading to the practical isolation and shrinkage of the financial services sector and (ultimately) the island’s economy.
The report states that “the Eurogroup and IMF’s selective use of deposits above 100,000 euros for the recapitalization of the banks, simply because they are uninsured, weakens (instead of strengthening) the Eurozone as a whole and subverts the European system of bank supervision and resolution of banking crises, which was decided in the midst of the Eurozone crisis. This is a dangerous practice that can even lead to the weakening of the European Union itself, that the enlightened European Leaders of other times spent their lives creating and regulating”.
The full report is available here.
