Russia may need to review the share of euros it holds in its central bank reserves over the euro zone’s bungled handling of a bailout of Cyprus, Prime Minister Dmitry Medvedev was quoted on Thursday as saying.
“I would like to answer in an optimistic way but I have to say that this is a reason to think about it,” Medvedev said when asked whether the situation in Cyprus was a reason to reduce the euro share of Russia’s reserves, according to Interfax.
Some 42 percent of Russia’s foreign exchange holdings – the world’s fourth-largest – were held in euros as of January 1 this year, when Russia’s total gold and forex reserves were worth $537 billion.
“This is a big money but for us, as for any other country, predictability is important, while the proposal (to levy a tax on bank deposits) was not only unpredictable but is evidence of a certain inadequacy,” Medvedev was quoted as saying.
In a vote on Tuesday, the island’s legislature threw out the proposed tax, which was a condition for a 10-billion euro bailout from the EU, and the country ordered banks to stay shut till next week to avert financial chaos.
“If it can be done in Cyprus, why not in Spain, in Italy, or in other countries where there are problems with finances? Tomorrow they will start to confiscate deposits there. This is a reason to begin to think,” he added.
On Wednesday Medvedev also said the EU had behaved “like a bull in a china shop” and compared its proposals, which would force Russian customers to contribute to the rescue of Cypriot banks, to Soviet-era confiscations. [Reuters]