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Meanwhile, Cash Exodus From Cyprus Surges Despite Bank Closures, Capital Controls

Tyler Durden's picture


When Cyprus put its banks into lockdown last weekend until... well indefinitely, now that capital controls are established, the main reason was to halt all capital outflows from the henceforth liquidity starved island whose banks will only exist as long as the ECB provides an ever greater dose of liquidity to account for the collapse in deposit funding. Which is why it is surprising, make that shocking, that as Germany FAZ reports, in the past week there has been a surge in cash outflows from Cyprus, even as its financial system has been supposedly ringfenced from the world, which by the way is the only thing preventing the EUR17 billion bailout from soaring by orders of magnitude because should a liquidity leak be discovered, it is all over for the country's financial system. 

From FAZ, google translation edited:

Despite the closed banks and a lock for payments in the past week, more money flowed out of Cyprus than in previous weeks, Frankfurter experts report for payments. Prior to the escalation of the crisis in Cyprus accruing on the payment system Target liabilities of Cypriot central bank to the European Central Bank (ECB) had increased daily at approximately 100 to 200 million euros. In recent days was after Parliament the stabilization program initially had to fail, the daily has risen to more than double. Just in the last week so could cash assets have been withdrawn from Cyprus in the billions, although the Cypriot central bank has actually issued a lock.


Broad exemptions from capital controls


A few days ago, the Cypriot Fed made aware of the payments was interrupted. In the official announcement, which in these cases are quite common exceptions, however, are very broad. Allowed are transfers of humanitarian aid, those are not received financial stability is at risk, and "special payments", which are not defined in detail. The unusually high outflows from Cyprus in recent days indicated but then, that the central bank in Nicosia control rather liberally interpret, some analysts suspected for payments.

How is it possible that cash is leaving the country even with a bank halt? It isn't, unless of course, the banks aren't really halted, and some outbound wire transfers, which are permitted, are more equal than other wire transfers which are stuck on the island. Of course, that would imply an "Europe Farm" type of arrangement, which in the bastion of fairness, equality and honesty which is Europe, would be absolutely impossible.

On the other hand, if indeed the drain of the Cypriot banking system has continued despite all the enacted halts during the past week, then it's game over for Cyprus, which will soon have only the ECB to thank for providing liquidity, an arrangement that may not be the best long-term outcome for a nation whose economy has basically been gutted in the span of one week.

It also means game over for the bailout as envisioned, as the EUR17 billion is history, and much more cash will have to be injected to cover for the stealth outflows.

Of course, in what is now a Pandora's Box experiment in kicking the box, nothing could possibly surprise us. After all, even in a worst case scenario, there are GETCO algos doing the bidding of the BIS and literally bidding up the EURUSD to such levels as allow everyone to ignore the absolute terminal disaster that has happened in Europe in the past week.

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Sun, 03/24/2013 - 18:30 | 3369810 flacon
flacon's picture

I really hope this brings down the global "financial" (system) pyramid scheme.

Sun, 03/24/2013 - 18:32 | 3369822 DJ Happy Ending
DJ Happy Ending's picture

The lack of a bank run in any of the PIIGS proves what a bunch of ignorant sheep the Europeons are.

Sun, 03/24/2013 - 18:34 | 3369828 idea_hamster
idea_hamster's picture

"How is it possible that cash is leaving the country even with a bank halt?"

I don't know -- how did Bin Laden's relatives fly out of the US while there was an order grounding all air traffic?

Sun, 03/24/2013 - 18:46 | 3369875 Cognitive Dissonance
Cognitive Dissonance's picture

Just guessing here......but maybe they used their handy dandy Get-Out-Of-Jail-Free "Monopoly" Card?

<Or maybe nothing is or was as it seemed regarding 9/11.>

Sun, 03/24/2013 - 19:10 | 3369921 AlaricBalth
AlaricBalth's picture

Well, I guess that answers one of the questions I was pondering yesterday.
I'm wiling to bet that the European and US funds with cash in Cyprus banks are more equal than others.

"...There are many European, Ukrainian, Russian, Jordanian and American funds and investment trusts that have exposure to the Cypriot crisis. Billions have been invested in these funds. Will they be subject to capital controls as well? Will they experience any impairment? In order to do business in country, a Cyprus domiciled bank must be used as custodian and/or pay agent."


Sun, 03/24/2013 - 19:43 | 3370048 NoDebt
NoDebt's picture

I could cover a lot of ground under the "humanitarian aid" banner.  And "special payments?"  Wow.  How about I ESPECIALLY want to get my money out of your thieving hands?

Sun, 03/24/2013 - 19:44 | 3370054 blindman
blindman's picture

what is the latest on the jp morgue international front
office in Cyprus?

Sun, 03/24/2013 - 20:01 | 3370146 Buck Johnson
Buck Johnson's picture

People are getting screwed big time and they haven't seen it yet.

Sun, 03/24/2013 - 20:41 | 3370326 Mesquite
Mesquite's picture

Insiders R Us...(As usual...)

Sun, 03/24/2013 - 18:53 | 3369891 Urban Redneck
Urban Redneck's picture

These aren't even Russian Oligarchs using the Teng Bunma bank withdrawal method- it is bankers and politicians using SWIFT (in addition to routinely pointing guns at airline staff, Teng is also known to point them at bank managers when he wants to make a withdrawal after-hours or during a bank holiday).


Sun, 03/24/2013 - 18:54 | 3369900 stocktivity
stocktivity's picture

It's the politicians and fat bankers that are able to move their money out

Sun, 03/24/2013 - 19:19 | 3369982 fockewulf190
fockewulf190's picture

...and all their friends. No wonder Putin doesn't give a shit...I'll bet most of the Russian money is already gone.

Sun, 03/24/2013 - 19:50 | 3370073 nmewn
nmewn's picture


They don't really believe in fraternity, liberteee...a "we're all in this together" attitude of comrahhhddduuuurrreee? That all those archaic sayings are meant for the chumps?...lol.

This line cut to the chase...

"How is it possible that cash is leaving the country even with a bank halt?

It isn't, unless of course, the banks aren't really halted, and some outbound wire transfers, which are permitted, are more equal than other wire transfers which are stuck on the island. Of course, that would imply an "Europe Farm" type of arrangement, which in the bastion of fairness, equality and honesty which is Europe, would be absolutely impossible."

Trust is an earned thing. It can't be forced on people...coerced.

I've always been intrigued by the notion that if they shut off access to my bank account, what assets of THEIRS can I strip from them that are just laying around unattended?

Maybe that Mercedes sitting over there would be a good start ;-)

Sun, 03/24/2013 - 20:29 | 3370263 Race Car Driver
Race Car Driver's picture

> Maybe that Mercedes sitting over there would be a good start ;-)

Perhaps. But the car - like the assets in your bank account - isn't yours to do that with. You don't own Fed notes - Fed notes own you. Same with your house, car ... etc. You and me - we own nothing. We can use shit thru title and licensing - but we don't really ever own it.

And that's why you can't have the assets in your bank account when they close the bank - the shit ain't yours. You merely store it there and use it when needed... but a chosen few ultimately control how and when you use it.

Sun, 03/24/2013 - 19:02 | 3369928 jldpc
jldpc's picture

We should have known then - damn that was a very visible indication of absolute corruption at the highest level - the seals got the wrong guy - it should have been Bush who lied to us over and over again - that the fucking politicians will steal every dime we have - one way or another in their criminal connection with the banbksters - money. Remember in the USA no one who commits a financial crime connected to a politician gets prosecuted.

Sun, 03/24/2013 - 19:06 | 3369940 CheapBastard
CheapBastard's picture

No Muppet transfers allowed.

Sun, 03/24/2013 - 19:34 | 3370031 DosZap
DosZap's picture

I don't know -- how did Bin Laden's relatives fly out of the US while there was an order grounding all air traffic?

Better yet, how Saudi's responsible for the 9-11 flights, anre now allowed a PASS on Passport cks by J Reno's sister.

Sun, 03/24/2013 - 19:39 | 3370044 El Tuco
El Tuco's picture

On Airfarce One.......mamosa's anyone...

Sun, 03/24/2013 - 18:37 | 3369839 toys for tits
toys for tits's picture

We won't know if there's been bank runs until we get the deposit information.

But the announcements that we've been having makes me think that others in the sector are seeing runs.

Sun, 03/24/2013 - 18:57 | 3369909 andrewp111
andrewp111's picture

Maybe not runs, but at least little jogs or slow leaks.

Sun, 03/24/2013 - 19:30 | 3370017 Jake88
Jake88's picture

And what of the ignorant Americans who are so deluded that they think it won't happen here.

Sun, 03/24/2013 - 21:51 | 3370660 thisandthat
thisandthat's picture

You mean unlike Americans back in 2008?

Sun, 03/24/2013 - 18:32 | 3369825 HelluvaEngineer
HelluvaEngineer's picture

Germany FAZ?  How ironic.

Sun, 03/24/2013 - 18:48 | 3369880 Banksters
Banksters's picture

Imagine going to jail for moving your money to a safer place as Banksters get immunity from prosecution.


Sun, 03/24/2013 - 19:00 | 3369923 disabledvet
disabledvet's picture

imagine all savers having their money turned into "equity" in a bank that is now worthless "save for the big money" which is now gone. you could argue we have "progressed" in the sense that it used to be the Banks just closed for good and that was that. "now you get an equity stake worth ten percent of what you thought you had in there." doesn't sound like much progress though.

Sun, 03/24/2013 - 19:05 | 3369936 carlsbro
carlsbro's picture

Relax losers. Deal tonight and DOW 16,000 tomorrow

Sun, 03/24/2013 - 19:30 | 3370012 Radical Marijuana
Radical Marijuana's picture

If so, flacon, do you also hope to see genocidal wars, along with democidal martial law? Those could well be the real consequences of the global pyramid scheme collapsing. I really hope that continues to be as postponed and protracted as possible, although I think it is inevitable. This Cyprus story unfolding appears to be an example of the OEDIPAL DILEMMA of self-fulfilling prophecy!



Sun, 03/24/2013 - 19:31 | 3370020 DosZap
DosZap's picture

I KNOW, we KNOW whose cash is getting out.........and for what nations account holders.

Score ONE again for the Ever crooked Banksta Gangstas.

Sun, 03/24/2013 - 18:31 | 3369813 DoChenRollingBearing
DoChenRollingBearing's picture

$500 came OUT of the ATM today, and it ain't going into stocks.  Even if Barron's is bullish...  CA$H and gold works for me.

"Review of Barron's -- Dated 25 March 2013"


Sun, 03/24/2013 - 19:29 | 3370014 billhilly
billhilly's picture

Excellent DCRB.  I wish I could withdraw 500 dollars but I don't have ANY cash in a banking entity. 

Time to ZERO OUT those accounts folks.  Do it yourself or they'll do it for you.

Sun, 03/24/2013 - 19:59 | 3370142 DoChenRollingBearing
DoChenRollingBearing's picture


Yo, get to the point where money IN THE BANK is diversification!

Sun, 03/24/2013 - 19:47 | 3370062 NoDebt
NoDebt's picture

I took out $500 from the ATM today and I'm heading to Canada.  No joke.

Ok, Ok, it's just Niagara Falls with the family for vacation, but it does sound sinister, doesn't it?

Sun, 03/24/2013 - 20:01 | 3370149 DoChenRollingBearing
DoChenRollingBearing's picture

Uncle Janet has a place for you!

Hmm...  FEMA Camp No. 131, near Rochester...

Mon, 03/25/2013 - 02:51 | 3371317 ebear
ebear's picture

Niagra Falls!!!  Slowly I turned...

Sun, 03/24/2013 - 18:29 | 3369815 NoWayJose
NoWayJose's picture

Some MOAR equal than others is the European Way! I said there would be a whole bunch of back dated transfers timestamped right before the bank closures.

Sun, 03/24/2013 - 18:31 | 3369818 jeebus
jeebus's picture

Some good basketball games on tonight on CBS.

Sun, 03/24/2013 - 18:32 | 3369821 THX 1178
THX 1178's picture


Sun, 03/24/2013 - 18:31 | 3369820 Hondo
Hondo's picture

Germans getting paid??;

Sun, 03/24/2013 - 19:01 | 3369916 Abraxas
Abraxas's picture

Interesting point, but not likely. What they (EU, the Germans, banksters, etc) want is collateral, not just worthless paper. Collateral may include islands, utilities, public property and Cyprus posterity.

Sun, 03/24/2013 - 19:01 | 3369927 disabledvet
disabledvet's picture


Mon, 03/25/2013 - 00:37 | 3371165 Nobody For President
Nobody For President's picture

Spiderman towels?

Sun, 03/24/2013 - 18:32 | 3369823 Legolas
Legolas's picture

Does this news somehow endanger the bailout?   How so?

Sun, 03/24/2013 - 18:32 | 3369824 Conflict of Interest
Conflict of Interest's picture

They must have put the money in Al Gore's lockbox.

Sun, 03/24/2013 - 18:32 | 3369826 Sabibaby
Sabibaby's picture

A leak like some people are able to get their money out but not others? Kinda like a "who ya know" type of deal?

I wonder if any US Senators or CONgressmen have money in Cyprus? I'm thinking the Russian's have first access to the leak though.

Sun, 03/24/2013 - 18:48 | 3369879 BurningFuld
BurningFuld's picture

OR it could be a "Who you threaten to kill deal."

Sun, 03/24/2013 - 19:08 | 3369947 disabledvet
disabledvet's picture

tough call if you're a banker. do i "follow the money" or "try and save the thing...and my town with it." http://www.youtube.com/watch?v=_Er69b4HMl8

Sun, 03/24/2013 - 19:47 | 3370065 Sabibaby
Sabibaby's picture

Is there anyway to trace where the money is going to?

Mon, 03/25/2013 - 05:59 | 3371397 pine_marten
pine_marten's picture

Not when it's been "vaporized".........

Mon, 03/25/2013 - 21:46 | 3375175 MeelionDollerBogus
Sun, 03/24/2013 - 18:35 | 3369834 blindman
blindman's picture

you guys an' gals are great reporters!

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