We all remember German finance minister Woflgang Schaeuble claiming that Cyprus was not systemically relevant for the euro zone. His slogan was more or less that the collapse of Cyrpus’s banking sector would not affect the eurozone as the impact could not be systemically.
Today, Wolfgang Schaueble claimed exactly the opposite: that if Cyprus collapses other euro zone nations will suffer as well.
German finance minister warned indeed that refusing a rescue package to Cyprus risked triggering a sovereign default and contagion to other euro nations.
“We must avoid turning the problems in Cyprus into new problems for other euro countries. Cyprus is in a dramatic situation. If we don’t help Cyprus, then Cyprus inevitably faces sovereign default.”
Schaeuble shot his warning at the direction of members of the German Parliament (Bundestag) short before the voting to approve the 10-billion-euro rescue package for Cyprus.
The obviously scared MPs voting in favor of the rescue for Cyprus with an overwhelming majority.
Schaeuble stands not alone at the finance ministers’ speakers corner, who claim A today and B tomorrow. His Greek counterpart Yiannis Stournaras admitted Wednesday the risks for the Greek banking system during the Cyprus’ banking sector in March.
“Had Greek account-holders’deposits at Cypriot lenders in Greece been subjected to a haircut, no one knows what could have come next.
“Thankfully there was a happy ending to that,» he said.
“We acted according to an organized plan so as to immediately resolve the problem with the branches of Cypriot banks in Greece,» Stournaras added.
Whereas every Greek can still easily recall, his and his Greek colleuages assurances “there was never a risk for the Greek banking sector.”
PS I suppose, should the Cyrpiot government ask for more aid, Schaeuble would probably tell them “we don’t care, if you go under”. To his euro zone collegues, Schaeuble would promise “No problem for us, if Cyprus default.”
Or he is playing the usual games, as the euro rose after the voting helping gamblers earn some money.