ECONOMY

ECB’s Coeure: Dijsellbloem wrong to suggest Cypriot bailout model could be used elsewhere

European Central Bank executive board member Benoit Coeure said on Tuesday that Coeure Eurogroup chief Jeroen Dijsselbloem was wrong to suggest on Monday that the restructuring of the Cypriot banking system will serve as a model for other countries.

“Dijsselbloem was wrong to say what he said,” Coeure said on Europe 1 radio.

“The experience of Cyprus isn’t a model for the rest of the euro zone because the situation there reached a level that doesn’t exist elsewhere,” Coeure said. “All countries have different problems — economic problems, problems of unemployment — but no country has the same concentration of problems as Cyprus.”

The Eurogroup issued a statement on Monday night denying that its chief, Dutch Finance Minister Jeroen Dijsellbloem, had suggested that depositor bail-ins would be used for bailout programs as in the case of Cyprus.

“Cyprus is a specific case with exceptional challenges which required the bail-in measures we have agreed upon yesterday,» the Eurogroup said in a statement.

“Macro-economic adjustment programs are tailor-made to the situation of the country concerned and no models or templates are used.”

Earlier, Dijsellbloem had suggested that bank shareholders, bondholders and depositors could be asked to contribute to the recapitalization of lenders instead of the banks being lent money as part of bailout programs.

“If there is a risk in a bank, our first question should be ‘Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?’. If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders,» he said in an interview with Reuters and the Financial Times.