If the IMF, the EU and the ECB had thought to count thousand by thousand funds of off-shore companies in Cypriot Banks, they will be deeply disappointed. Real life -and capital – move much faster in times of globalization. Crisis-hit Cyprus aims to secure IMF-EU bailout within the month of October. Who would be naive enough that offshore funds would stay in Cyprus and wait for zealous Troikans to open bank accounts and ask stupid questions?
Offshore deposits move from Cyprus to Latvia
Offshore funds flowing from crisis-hit Cyprus have helped boost bank deposits in Latvia, strengthening the small Baltic state’s position as an offshore banking centre for neighbouring Russia and other ex-Soviet states, recent data reveal.
Regulators are keeping a wary eye on the development as Latvia, which aims to join the eurozone in 2014, suffered a deep crisis after the crash of a bank with heavy non-resident business in 2008, and some of its banks have been implicated in alleged money laundering.
A European Union source said Latvia had improved supervision of its banks after a crisis that lopped 25% off its output over 2008-2010, and the country was now attracting funds as a gateway to the EU, and, potentially to the eurozone, which Latvia wants to join in 2014.
“There are signs that some of the money and business, which until recently were at the Cypriot banks, have moved to Latvia,” said Baiba Melnace, a spokeswoman for the Latvian Association of Commercial Banks.
FKTK data show that while domestic deposits fell between the end of 2010 and July 2012, non-residents’ deposits have risen 25% to a record 5.8 billion Latvian lats (€8.28 billion).
In contrast, data from Cyprus, which suffered from Greece’s woes and has requested a bailout, shows bank deposits by businesses resident outside the EU fell from €13 billion in August 2011 to just over €11 billion in August this year.
The coincidence is striking but does not make it possible to quantify the hot money leaving Cyprus is flowing into Latvia. (Read Full Article in EurActiv)
I assume, it’s too early to quantify the hot money travelling one way ticket Cyprus-Latvia…