Clear differences between crisis in Cyprus and Greece, says European Commission

Brussels – European Commission official Simon O’Connor stressed on Wednesday that there were substantial differences between the economic problems in Cyprus and Greece as he sought to ally any fears of the Cypriot causing contagion in other countries.

“There are clear and important differences between the situation in Cyprus and the situation in Greece,” O’Connor, a spokesman for European Economic and Monetary Affairs Commissioner Olli Rehn, told Kathimerini.

“Crucially, the Greek crisis did not originate in the banking sector and the Greek banking sector is much smaller in comparison to the country’s GDP than in Cyprus.

“Moreover, Greece has significantly improved its banking supervision to ensure prudent management of banks.”

In Cyprus, bank assets stood at 703 percent of GDP last year, whereas in Greece they were the equivalent of just 212 percent of GDP. O’Connor said the recapitalization of Greek banks was also making the financial sector in Greece more secure.

“In Greece, a financial stability fund (HFSF) has been set up with a funding capability of 50 billion euros to guarantee the recapitalization and consolidation of the banking sector,” he said.

“The HFSF has successfully ensured that banks in Greece have a high level of capital and hence run a stable operation. Full recapitalization of the Greek banks will be completed within two months. During the consolidation process of the sector, all deposits have been continuously available in full to bank customers. This principle will continue to be followed in the future too.”

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