Peterson Institute advises Cyprus to follow Iceland’s example on banks

Cyprus should follow Iceland’s example in dealing with its banking crisis by refusing to safeguard some overseas deposits, the Washington-based Peterson Institute for International Economics said on Wednesday.

If Cyprus decides to protect 84 billion euros held by domestic and European Union depositors, that would still leave more than 30 billion euros from non-EU deposits and other creditors “vulnerable to losses,” Jacob Funk Kirkegaard, a senior fellow at the institute, said in a note.

That could ensure Cyprus doesn’t add 10 billion euros of public debt to bail out its banks, he said.


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