“Superhuman Effort” Needed To Reopen Cyprus Banks, Says Central Bank Governor
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Cyprus’s central bank governor Panicos Demetriades has called for a “superhuman effort” to meet a Thursday deadline for reopening banks, warning that any further delay could spur further doubts about the economy and spark more unrest – as thousands of Cypriots protested on the streets on Tuesday.
Cyprus’s central bank governor Panicos Demetriades has called for a “superhuman effort” to meet a Thursday deadline for reopening banks, warning that any further delay could spur further doubts about the economy and spark more unrest – as thousands of Cypriots protested on the streets on Tuesday.
Demetriades, who faced strong calls for his resignation by bank workers, said that the previous delays to reopen the island’s banks had been necessary to fully install capital controls; while the central bank were also forced to impose restrictions for withdrawal limits in order to avoid a bank run.
[quote]”A superhuman effort is being made for the banks to open on Thursday,” he said, according to AFP. “Each day the banking system is closed, people’s trust diminishes and they want to get their money out, so we are obliged to impose restrictions.”[/quote]The sense of uncertainty deepened when Bank of Cyprus chairman Andreas Artemis suddenly tendered his resignation due to concerns about the impact of the bailout. Although the bank’s board of directors subsequently rejected it, hundreds of staff at the bank flooded into its headquarters in Nicosia to express fear over their jobs.
[quote]”We don’t know if the bank will be closed or if we will have work… we have to demonstrate to show that we don’t want others to decide for our lives,” Andreas Costa, a 53-year-old bank employee, said.[/quote]Meanwhile, Fitch Ratings cut its evaluation for Bank of Cyprus to “restricted default,” a grade which means that the bank has experienced a payment default on a bond, loan or other material obligation but has “not entered into liquidation or ceased operating.”
Fitch said it was cutting its credit grades for all Cypriot banks because of the losses imposed by the bailout deal.
In an op-ed piece for the New York Times, Nobel Prize winning economist Paul Krugman also suggested that “Cyprus should leave the Euro. Now.”
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“The reason is straightforward: staying in the euro means an incredibly severe depression, which will last for many years while Cyprus tries to build a new export sector. Leaving the euro, and letting the new currency fall sharply, would greatly accelerate that rebuilding.
[quote]“If I were dictator, I’d just extend the bank holiday long enough to prepare for the new currency,” Krugman added. “Yes, it all sounds kind of desperate and improvised. But desperation is appropriate! Otherwise, we’re talking about Greek-level austerity or worse in an economy whose fundamentals, thanks to the implosion of offshore banking, are much worse than Greece’s ever were.”[/quote]
