scott s. Wrote:
Mar 26, 2013 4:40 PM
Not a problem with a sovereign currency, as the Fed can always step in, as it did in 08. The problem Cyprus has is using the Euro, and is thus at the mercy of the ECB. The point of the exercise seems to be to get depositors to transfer Euros to German banks. From a fairness POV, those who put deposits in excess of 100,000 Euro insurance into unsound bank like Laiki deserve to lose it for failure of due diligence. Like FDIC deposit insurance, failure to honor the 100,000 guarantee would be devastating. Of course if Cyprus enacts currency controls, effectively it leaves the Eurozone.