Sunday April 19, 2015 Search
Weather | Athens
14o C
09o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Cyprus says Greek bond deal killed its economy

Representatives of the European Union and International Monetary Fund arrived in Nicosia for talks this week

Cyprus delivered a tough critique of the euro zone's decision to restructure Greece's private-sector debt on Friday, saying it had effectively thrown the Cypriot economy into turmoil and forced it into bailout of its own.

Euro zone leaders agreed in late 2011 to write down the value of private sector holdings of Greek government bonds to try to cut Greece's debt by around 100 billion euros - a process known as PSI, or private sector involvement.

It was a controversial decision and one that the former president of the European Central Bank, Jean-Claude Trichet, had warned EU leaders could cause repercussions.

For Cyprus, the euro zone's third smallest economy, with a GDP of just 17 billion euros and a large banking exposure to Greece, it meant that Cypriot banks had to write off around 80 percent of the value of their holdings of Greek bonds.

That in turn made it harder to access inter-bank borrowing or to post collateral with the ECB to access liquidity.

Finance Minister Vassos Shiarly said Cyprus's economy, fuelled by a buoyant property sector and services industry, would not have run into the severe problems it currently faces were it not for the PSI decisions.

"Effectively, because of our close proximity, financial proximity to (Greece), we were called upon to pay a very heavy price,» he told Brussels-based journalists during briefings in Nicosia as Cyprus takes over the presidency of the European Union for the next six months.

"Cypriot banks that owned Greek sovereign bonds lost about 80 or 81 percent of their total investment, which in actual terms amounts to 4.2 billion euros,» he said, underlining that that amount to 24 percent of economic output.

"The real problem stems from that particular investment. If you ask me whether this was a fair way to deal with it, I would say no, this was not a fair way of dealing with it."

Instead the minister argued that 100-billion-euro writedown of Greece's government debt - a process that has still not restored the country to debt-sustainability - should have been portioned out the basis of the size of euro zone economies.

That would have meant Germany paying the most - around 27 percent of the total - and Cyprus just 0.2 percent.

"What we should have done is share that loss fairly, on a level playing field, as the Europeans do, in a manner of solidarity,» the finance minister said.

"If our share had been fairly evaluated ... our total loss might have been in the order of 200 million euros - one would say petty cash these days. But as I've said, our write off was 4.2 billion."

[Reuters]

ekathimerini.com , Friday Jul 6, 2012 (14:28)  
US Treasury secretary urges Greece to reach debt deal
Greece poised to sign gas deal with Russia, says German weekly
Russia gas deal would not solve Greece’s problems, says Schaeuble
Spanish official slams Greece, says time ´running out´
Kotzias to begin US visit with Kerry meeting in Washington
Foreign Minister Nikos Kotzias is due to begin a five-day visit to the US on Monday. He will begin his trip by meeting Secretary of State John Kerry in Washington, where he will also hold ta...
Turkey asks for investigation into Greek mosque attacks
The Turkish Foreign Ministry has asked Greece to investigate the vandalism of two mosques in Komotini following incidents on Friday. “Turkey requests Greek authorities to clarify as soon as ...
Inside News
BASKETBALL
Triumph for Olympiakos at Barcelona
Olympiakos produced its best away performance so far this season to defeat host Barcelona 76-63 on Friday and snatch the home advantage in the Euroleague play-offs. The Reds have now tied th...
BASKETBALL
Another heavy loss for improved Panathinaikos in Moscow
Panathinaikos raised its performance since Tuesday but still suffered a 20-point loss at CSKA Moscow on Thursday to find itself trailing 2-0 after Game 2 of the Euroleague play-offs. Having ...
Inside Sports
COMMENTARY
Back to the beginning
From 1980 up until the present day, the Greek educational system has given a false sense of democratization based on a flawed system of educator and student participation. The educational ou...
EDITORIAL
Protecting a key asset
Tourism has emerged as the only real “heavy industry” in Greece to have weathered the crisis so it is not only a question of duty that everyone protect it but also interest. To begin with, m...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. US Treasury secretary urges Greece to reach debt deal
2. Greece poised to sign gas deal with Russia, says German weekly
3. Russia gas deal would not solve Greece’s problems, says Schaeuble
4. Spanish official slams Greece, says time ´running out´
5. Kotzias to begin US visit with Kerry meeting in Washington
6. Turkey asks for investigation into Greek mosque attacks
more news
Today
This Week
1. Back to the beginning
2. Terrorism suspects caught following German request
3. Golden Dawn on trial amid conflict over court venue
4. US Treasury secretary urges Greece to reach debt deal
5. Greece poised to sign gas deal with Russia, says German weekly
6. Turkey asks for investigation into Greek mosque attacks
Today
This Week
1. Quarantine for Greek bank subsidiaries in neighboring countries
2. Greek finance ministry hits back at German newspaper report
3. Time to get serious
4. 'Civil war' brewing over disputed Greek goldmine
5. In the shadow of Greek prison, locals dread Golden Dawn trial
6. Putting off payments led to Q1 budget primary surplus
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2015, H KAΘHMEPINH All Rights Reserved.