Every official from the EU, the IMF and the ECB and every finance minister of the eurozone justified the bank deposits levy with the “special case of Cyprus”. However the masks fell and thus much sooner than expected. On Monday afternoon, President of Eurogroup Jeroen Dijsselbloem was unable to hide his enthousiasm about the successful Cyprus rescue plan, that foresses a massive haircut of deposits above 100,000 euro. He directly threatened savers in other eurozone member countries.
Dijsselbloem: “Cyprus deal is template for the future, Europe could now take a new approach to tackling struggling banks.
Eurogroup head Jeroen Dijsselbloem has sent the euro tumbling by declaring that the Cyprus rescue should be seen as a template for the rest of the eurozone.
Dijsselbloem: “A rescue programme agreed for Cyprus on Monday represents a new template for resolving euro zone banking problems and other countries may have to restructure their banking sectors”
In an interview with reporters in Brussels after the Cyprus plan was agreed, Dijsselbloem argued that Europe could now take a new approach to tackling struggling banks.
Got a euro in the eye?
“What we’ve done last night is what I call pushing back the risks.
If there is a risk in a bank, our first question should be ‘Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?’.
If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders.
If we want to have a healthy, sound financial sector, the only way is to say, ‘Look, there where you take on the risks, you must deal with them, and if you can’t deal with them, then you shouldn’t have taken them on….
The consequences may be that it’s the end of story, and that is an approach that I think, now that we are out of the heat of the crisis, we should take.
Asked what the new approach meant for euro zone countries with highly leveraged banking sectors, such as Luxembourg and Malta, and for other countries with banking problems such as Slovenia, Dijsselbloem said they would have to shrink banks down.
“It means deal with it before you get in trouble. Strengthen your banks, fix your balance sheets and realise that if a bank gets in trouble, the response will no longer automatically be that we’ll come and take away your problem. We’re going to push them back. That’s the first response we need. Push them back. You deal with them.”
The key to Dijsselbloem’s comments is that he’s suggesting that Europe will no longer need the European Stability Mechanism (ESM) — the €700bn fund that was meant to be on standby to prevent a banking collapse.
Dijsselbloem crashes the Euro and the Stocks
Dijsselbloem’s statement that Cyprus rescue plan could be applied also for the rest of the eurozone sent the euro trembling.
The interview sent the euro sliding, and pushed shares down across Europe, with stocks in Spain and Italy suffering most. Several Italian banks have just been temporarily suspended (for dropping more than 5%).
Need help. I can’t see all the euros in EZ banks.
1) After this statement why should citizens and companies leave more than 100,000 euro in the banks of the euro zone area?
2) Does Dijsselbloem want to trigger a bank run, especially in the weak economies of the EZ South?
What? Got a €100,001-account?
3) Does the EZ North want to get hold of the PIIGS assets?
4) Does the Eurogroup consists of a bunch of the idiots my granny always warned me about?
PS I did post about the utterer motives of the rich EZ countries. I wish, I had played a tip 5+1 lucky numbers in lottery.