Cyprus banks under scrutiny

Joaquín Almunia, Vice President of the EC receives Wolfgang Schäuble, German Federal Minister for Finance (on the left). (EC Audiovisual Services)

Joaquín Almunia, Vice President of the EC receives Wolfgang Schäuble, German Federal Minister for Finance (on the left). (EC Audiovisual Services)

Eurozone’s support to Cyprus is not on the agenda of todays’ Eurogroup, the council of the 17 Eurozone ministers of Finance, nor will this issue be discussed in tomorrows’ Ecofin, the council of the 27 EU economic ministers. This is a clear sign that there will not be any decision on this problem until the general election in the island  next month.

The divided island’s democracy has asked for Eurozone’s help to counter its financial woes. The problems of Cyprus stared when the Greek sovereign debt bonds held by the Cypriot banks had a deep haircut of around 50% of nominal values in March 2012. On top of that what was left of those Greek bonds had to be purchased by the issuer the Greek State, for around 30% of nominal their nominal values.

The huge gap left in Cypriot banks’ capital of almost €9 billion has now to be covered by the Eurozone financial aid mechanisms, the European Financial Stability Facility and the European Stability Mechanism. The sums involved surpass the tiny economy’s abilities and the Nicosia government had to call in the Brussels and the International Monetary Fund “cavalry”. As a result the country will be under auditing in order to receive the financial help of the “troika” of the European Union, the European Central Bank and the IMF. The procedure will be approximately the same as in the cases of Greece, Portugal and Ireland currently supported and directed in their financial affairs and structural reform by this troika.

Cypriot banks

This development however revealed also the shortcomings of the state finance and now the entire package, Cypriot banks and government finance, have to be reshaped according to the demands of the troika. The case of Cyprus resembles more the one of Ireland, rather than Greece or Portugal, with the banks being at the centre and the source of the problem.

It differs however from the Irish case because reportedly the Cypriot banking system was used by Russian oligarchs to park their spare cash, without questions asked. According to various sources that kind of money may be anything around €15 billion.

Given all that, tax paying citizens in countries like Germany (the largest financial contributor of the troika) has being informed by media reports that their tax money will be used trough Eurozone’s help to Cyprus, to “save Russian black money”. The idea is that Eurozone by salvaging the Cypriot banks and recapitalising them, the European taxpayers indirectly will be supporting the Russian oligarchs to retain their wealth intact.

At this point enters Wolfgang Schäuble. According to major German media reports the country’s Federal Minister of Finance is adamant that the Cypriot banks have to be under scrutiny for money laundering. According to Spiegel’s electronic edition a number of European governments, including Berlin, doubt if Cyprus applies the Eurozone rules to arrest money laundering and demand that a group of specialist travel and stay in Nicosia to sort out the problem. The aim will be to verify if the rules are being applied in everyday banking practice on the island.

In any case Cyprus is in dire straits over this affair and the present government of President Christofias doesn’t seem to have the political capital to short out the problem, being at the end of its term in office. The country is to hold elections towards the end of February and surely the first task of the new government will be this issue. Until then everything will remain “frozen”.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Why flexible workspaces are the key to winning the talent war

“France will be there, it will always be there!”, French President Hollande says in a rather disorganised speech; the Sting reports live from World Economic Forum 2015 in Davos

Getting people with disabilities into work requires data

Business management: how can you introduce new ideas?

Trump’s Russophiles under investigation, Europe remains ‘en garde’

The new Kiev rulers ask $35 billion from the West

Coding in Namibia: UN supports young women’s computing career dreams

Healthcare’s a human right, not ‘a privilege for the rich’ UNAIDS argues at Davos

Why precision medicine is the future of healthcare

Medical students: catalysts to close the gender gap

New book honours UN women who made HERstory

Cameroon: Clear ‘window of opportunity’ to solve crises rooted in violence – Bachelet

Around 52 million in Near East, North Africa, suffering chronic undernourishment, new UN food agency report reveals

WEF Davos 2016 LIVE: The health of capitalism won’t be the only worry for those who head for Davos

Mergers: Commission approves Varta AG’s acquisition of Energizer’s divestment business, subject to conditions

Environmental labelling, information and management schemes are central to the circular economy

Negotiated two-State solution still ‘the only option’ for Palestine: Guterres

Air pollution: How to end the deaths of 7 million people per year

4 ways blockchain will transform the mining and metals industry

Pollution could be harming every part of your body. Here’s how

UN human rights ruling could boost climate change asylum claims

A Sting Exclusive: “The competitiveness of Europe depends on a digital single market”, EPP President Joseph Daul highlights live from European Business Summit 2015

Mergers: Commission opens in-depth investigation into proposed acquisition of Transat by Air Canada

MEPs want ambitious funding for cross-border projects to connect people

WHO chief underscores need to address climate change following visit to Bahamas

Humanitarian aid: €7 million for disaster preparedness in Southern Africa and Indian Ocean region

2018 Golden Pen of Freedom Awarded to Maria Ressa of the Philippines

Who is first (and last) in the race to build a workforce fit for the future?

We won’t win the online security war without people power

4 ways the circular economy can help heavy industry reduce emissions

EU prepares a banking union amidst financial ruins

A ‘strong and united Europe’ has never been more needed, declares UN chief Guterres

Here are five ways we can make mental healthcare better

Guterres expresses ‘grave concern’ following explosion at large political rally for reform-minded Ethiopian Prime Minister

Coronavirus: Commission concludes exploratory talks with Valneva to secure a new potential vaccine

2013, a Political Odyssey: What future for Italy?

3+1 issues to haunt tomorrow’s EU Summit

‘Good enough’ global cooperation is key to our survival

5 amazing schools that will make you wish you were young again

FROM THE FIELD: Finding refuge in the ‘beautiful game’

There is a forgotten solution to climate change that we must invest in – nature

Coronavirus: a Disease that spreads as fastly as its fake news

How data is transforming the way we care for the ocean

This German supermarket’s shelves are filled with food other stores won’t sell

How trust and collaboration are key in India’s last mile response to the COVID-19 crisis

The European Sting writes down the history LIVE from G20 Leaders’ Summit in Turkey

At UN, Middle East countries discuss steps towards regional nuclear-free zone

Banking package: Parliament and Council reach an agreement

Coronavirus vs flu: how do they compare?

Autumn 2020 Economic Forecast: Rebound interrupted as resurgence of pandemic deepens uncertainty

Globally, youth are the largest poverty-stricken group, says new UN report

How a bionic arm is helping one little girl enjoy the things most take for granted

If you build it, they will come: Why infrastructure is crucial to tourism growth and competitiveness

7 steps to becoming a ‘CEO Academy’

Towards the Rise of the United States of the Atlantic?

How personalized care can tackle the late-life loneliness epidemic

Vaccines: contract between European Commission and AstraZeneca now published

There is no greater sorrow on earth than the loss of one’s native land

Are we letting politicians play with migrants’ health?

Mobile technology facilitating social distance in the middle of a pandemic

More Stings?

Comments

  1. Howdy! I know this is kind of off-topic but I had to ask. Does operating
    a well-established blog like yours require a large amount of work?
    I am brand new to operating a blog but I do write
    in my diary daily. I’d like to start a blog so I will be able to share my personal
    experience and feelings online. Please let me know if you have any
    suggestions or tips for brand new aspiring blog owners.

    Appreciate it!

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s