NEWS

Cypriot bail-in unique, insists Stournaras

On a day of conflicting views from European officials regarding how the eurozone will address bailouts in the future, Finance Minister Yannis Stournaras insisted on Tuesday that there were no plans to bail in depositors in other countries, as was the case in Cyprus.

“The eurozone is not insecure,” Stournaras said in response to a journalist’s question. “In fact, it was stated clearly at the Eurogroup that the solution chosen applies to Cyprus and not any other country.”

Stournaras’s comment came in the wake of Eurogroup chief Jeroen Dijsselbloem suggesting in an interview on Monday that uninsured depositors, as well as shareholders and bondholders, be asked to pay for recapitalizing failed banks, rather than the money being provided by the troika.

While Stournaras suggested this template would not be used elsewhere, the European Commission said it was a “possibility.”

“In the Commission’s proposal, which is under discussion, it is not excluded that deposits over 100,000 euros could be instruments eligible for bail-in,” said spokesperson Chantal Hughes.

Earlier, European Central Bank executive board member Benoit Coeure said Dijsselbloem was wrong to say bail-ins could be used again.

“Dijsselbloem was wrong to say what he said,” Coeure said. “The experience of Cyprus isn’t a model for the rest of the eurozone because the situation there reached a level that doesn’t exist elsewhere.”

Stournaras briefed President Karolos Papoulias and several opposition leaders yesterday about the Cypriot bailout deal. “I think the most viable option was chosen and it avoided a catastrophic euro exit,” he told Papoulias. “It may be painful but the next choice was even worse.”