Wednesday April 16, 2014 Search
Weather | Athens
19o C
12o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Germany spars with ECB over threat Cyprus poses to eurozone

By Rainer Buergin

Germany’s Finance Ministry said that Cyprus can only access international aid if it threatens the euro area’s stability, resisting European Central Bank warnings that the island economy might derail progress made in Europe.

Providing aid from the euro region’s financial backstops is linked to conditions that must be respected, Finance Ministry spokesman Martin Kotthaus told reporters in Berlin today. It is a legally binding condition of aid that Cyprus is deemed to be systemically relevant to the 17-nation euro area, so the question “must be asked,” he said.

The German focus on Cyprus’s obligations contrasts with ECB Executive Board member Joerg Asmussen, who told Greek newspaper Kathimerini yesterday that policy makers must realize Cyprus has the potential to cause damage beyond the size of its economy.

“If one simply looks at the size of the economy -- it is something like 0.15 percent of euro-area GDP -- they may conclude that Cyprus is not systemically important,” Asmussen, a former deputy German finance minister, told Kathimerini in comments confirmed by the ECB. “In normal times, one may be tempted to agree. But I think we are still not in normal times, and therefore I think that disorderly developments in Cyprus can harm the progress we made in Europe in 2012.”

ECB President Mario Draghi pressed German Finance Minister Wolfgang Schaeuble to recognize that Cyprus and its banks are a risk for the euro region as a whole, Der Spiegel reported in this week’s edition, without saying how it got the information. Schaeuble rejected the notion that Cyprus’s woes are “systemically relevant,” prompting Draghi to argue that this was a question for economists, not lawyers, the magazine said.

The so-called troika of the ECB, the International Monetary Fund and the European Commission must determine jointly that the situation in Cyprus is a threat to the euro region’s stability for the Mediterranean country to qualify for aid, Kotthaus said. Euro-region finance ministers will probably discuss a program for Cyprus at their meeting in March, based on analysis provided by the troika, the Finance Ministry said separately.

Asmussen said that a “bad development” in Cyprus could result in two kinds of developments. “One is possible contagion of Greece via banking channels, since a number of Cypriot banks are active in Greece,” he said. “Secondly, it can send the wrong signal to the rest of the euro area,” with countries such as Portugal and Ireland preparing to re-enter capital markets.

[Bloomberg]

ekathimerini.com , Monday Jan 28, 2013 (15:07)  
IBM to open new center in Athens for big data analytics
Benefits to all single-parent families and new unemployed
Supermarket chains sense worst is yet to come
Cost of borrowing via T-bills drops to pre-bailout levels
PASOK plays down coalition row over scheme for homeless
PASOK remained tight-lipped on Monday about a row that broke out with its coalition partner, New Democracy, late on Monday after Prime Minister Antonis Samaras announced the creation of home...
Greece´s new public sector wage structure ready in September
A new wage structure for civil servants will be ready in September, Administrative Reform Minister Kyriakos Mitsotakis said on Tuesday. The new scheme will contain financial incentives for p...
Inside News
BASKETBALL
Defense lets Olympiakos down at Madrid
Olympiakos played second fiddle to Real Madrid in a rather spectacular game in Spain on Tuesday going down 88-71 to trail 1-0 in the best-of-five quarterfinal series with the Spanish giant. ...
SOCCER
Apollon is relegated, Xanthi to face survival play-off
Apollon followed Aris to the second division and Xanthi will contest a relegation play-off, as the end of the regular season of the Super League on Sunday produced predictable results that a...
Inside Sports
EDITORIAL
Fundamental contradictions
The deep division running through the ranks of the country’s main opposition party regarding the euro and how Greece’s negotiations with its partners and creditors ought to be carried out is...
COMMENTARY
Empty vessels
US satirist and journalist Patrick Jake O’Rourke once said about American politics, “The Republicans are the party that says government doesn’t work and then they get elected and prove it.” ...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Defense lets Olympiakos down at Madrid
2. IBM to open new center in Athens for big data analytics
3. Benefits to all single-parent families and new unemployed
4. Supermarket chains sense worst is yet to come
5. Cost of borrowing via T-bills drops to pre-bailout levels
6. Eurobank reaps major investor interest
more news
Today
This Week
1. Greece's market return mirrors return of tourists
2. GD lawmaker hails Hitler, condemns homosexuality in interview
3. Suspected smuggler dies after trying to ram Coast Guard vessel off Kos
4. New Democracy to confirm list of candidates for Euro elections
5. Greek far right fires up Athens election campaign
6. Anchor investors bid for chunk of Greek Eurobank's share offer
Today
This Week
1. Bomb explodes outside Bank of Greece
2. Time to take a hard look at debt sustainability, says OECD chief
3. For faith and country
4. CCTV footage from Nigrita Prison shows signs of inmate torture [Video]
5. Samaras sees no need for third bailout
6. Car bomb explodes outside Greek Central Bank building, no one hurt [Update]
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.