I’m sure my headline is over-optimistic. But its certainly looking good, compared to the doom-laden view mid week. And (insofar as I can tell, not having any specialised insight) the correct solution has been found – so much so, that you might wonder why it wasn’t found immeadiately. And that solution, in brief, is to honour the guarantees for deposits of less than 100k euro, close the most broken bank, and impose losses on those with more than 100k euro.
The bit I find interesting is the Russian perspective. The original bad deal – losses on accounts above 100k limited to 10% – was clearly a result of “pressure” from Russia, though in what form its hard to say: it could have been anything from direct corruption of pols, to as little as those same pols not wanting to piss off the Russians to avoid losing future business. Was the pressure coming from teh Russian gummint, or from the dodgy folk who had parked their tax-avoiding money in a quiet offshore corner? And mid-week, when their finance minister was off in Russia trying to do some murky deal, it all looked very dodgy: Russia poised to snaffle up Cyprus because the EU were too skinflint to help it. But then: all that fell apart. The Russians weren’t interested. From which I draw the conclusion that they have no spare cash to push their imperial ambitions.
There’s a fun quote from some lawyer: “Since last Saturday, we are just answering calls from angry clients,” said the lawyer, whose firm has helped Russians and Ukrainians setup 6,000 companies in Cyprus so that they can avoid taxes, benefit from a sound legal system and, they hoped, keep their money safe. Cyprus still offers those draws, he insisted, but his clients “thought we had betrayed them.” Notice the bizarre juxtaposition of “avoid taxes” and “sound legal system” but in the end, they did indeed get a sound legal system, and are wishing they hadn’t.
[Update: as some of my commenters have pointed out, the “haircuts” imposed on the depositors seems rather high. Timmy has what looks like a plausible explanation for this – that only two banks are now affected. It has some interesting consequences.]