Following up yesterday's post, Musings on the Cyprus bail-out, the New York Times had a fascinating article yesterday, Europeans Planted Seeds of Crisis in Cyprus, that provided more on the detail of a crisis that I had not properly. The photo from the Times shows students demonstrating to protest the arrangements.
One key thing that I learned was the way that the forced cuts in the value of Greek Government bonds meant that those holding the bonds — notably the then-cash-rich Cypriot banks — would lose at least half the money they thought they had. Eventual losses came close to 75 percent of the bonds’ face value. Of course more was involved, but that level of loss seems to have ultimately doomed the Cypriot banking system. It's also interesting that the Cypriot Finance Minister apparently did not spot the danger at the meeting.
I was going to comment further tonight on regulatory issues, but this short post is all I have time for.
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