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21 Mar 2013
Forex Flash: The Cyprus crisis continues - BBH
FXstreet.com (Barcelona) - Brown Brothers Harriman analysts note that the Cypriot crisis continues to grind on.
They feel that it has become clear in recent days that the creditors are demanding EUR5.8 bln from Cyprus, but Cypriot officials continue to pursue particularly onerous and odorous ways of raises those funds. While the new elected President had favored the tax on small depositors, this was rejected, and they feel that Plan B is yet another way to throw its people under the proverbial bus.
They write, “He has reportedly floated the idea of capturing the state pension assets and in exchange providing government bonds backed by future revenue tied to the gas discoveries and then raising the remainder (~EUR1.6 bln) with a tax on large deposits. The Troika will not be able to sanction this as it does not stabilize the country's debt/GDP ratio. Separately, the ECB, which we understand had previously threatened to deny Cyprus banks access to any more ELA funds as of today, appears now to have given Cyprus the weekend to reach an agreement.”
They feel that it has become clear in recent days that the creditors are demanding EUR5.8 bln from Cyprus, but Cypriot officials continue to pursue particularly onerous and odorous ways of raises those funds. While the new elected President had favored the tax on small depositors, this was rejected, and they feel that Plan B is yet another way to throw its people under the proverbial bus.
They write, “He has reportedly floated the idea of capturing the state pension assets and in exchange providing government bonds backed by future revenue tied to the gas discoveries and then raising the remainder (~EUR1.6 bln) with a tax on large deposits. The Troika will not be able to sanction this as it does not stabilize the country's debt/GDP ratio. Separately, the ECB, which we understand had previously threatened to deny Cyprus banks access to any more ELA funds as of today, appears now to have given Cyprus the weekend to reach an agreement.”