This page has been archived and commenting is disabled.

When Is A Euro Not A Euro

Tyler Durden's picture


With the 'temporary' capital controls being imposed in Cyprus, Credit Suisse explains why a Cypriot euro not equal to a euro from any other member country. Furthermore, the clear fabrication of a 'seven-day' period for these controls (when monthly and quarterly limits on spending are also included) is questioned as they ask how such capital controls could eventually be lifted with no obvious cure of the underlying problem, i.e., the risk of a bank run. Since every guarantee is only worth as much as its guarantor, we would expect that in absence of a European wide deposit guarantee (which for political reasons and the aforementioned template look very unlikely) these capital controls are likely to stay for longer than originally planned. Unless this vicious circle is broken, this attempt to save the euro could ironically even become the template of how a member state could leave the currency union.

Via Credit Suisse,

A euro is not a euro


...Capital controls are being imposed as part of the [Cyrpus] deal. While this is legal according to the Treaty on the Functioning of the European Union (TFEU Art. 63, 65 and 66), it creates a situation in which a Cypriot euro is not equal to a euro of any other member country from an economic perspective. In fact, while euro bank notes in Cyprus are still worth the same amount as in other countries, in a market for euro deposits, a euro in a Cypriot bank account would now most likely not be trading at par with those of other member states.


Moreover, at the moment markets are being told that these capital controls are only temporary. But we are wondering how such capital controls could eventually be lifted with no obvious cure of the underlying problem, i.e., the risk of a bank run. With the aforementioned template in place and the necessity of a second bailout looking likely as a result of the economic shock currently rippling through the country, depositors are strongly incentivised to take out their money as soon as capital controls were to be lifted. In fact, this might already be in evidence, as we hear that large Russian deposits have been moved out of the country via foreign subsidiaries of Cypriots banks, who did not seem to have been restricted by the same capital controls as domestic banks. This is likely to increase the pain for the local Cypriot population, even more so now that the local bank holiday has been extended for two more days.


Since every guarantee is only worth as much as its guarantor, we would expect that in absence of a European wide deposit guarantee (which for political reasons and the aforementioned template look very unlikely) these capital controls are likely to stay for longer than originally planned.


Unless this vicious circle is broken, this attempt to save the euro could ironically even become the template of how a member state could leave the currency union.



Drifting apart

There is another development that eventually could become a serious threat to the long-term existence of the euro. Its roots lie in the fact that the euro has always meant different things to different people. It would be too simple to reduce this to one dimension, but the role of the ECB and how it balances its priorities of price stability versus financial stability is just one example.

So while in good times the euro seemed to have managed to be all things to all people, now in economic distress, the difference in believe of what is needed to keep the currency alive are becoming a lot more visible. As a result, inner European resentment is increasing, with the core being blamed for too little help under too strict conditions and the periphery sometimes perceived to be too reluctant to change.

This is dangerous, since without the general acceptance of the strings attached to the common currency, the risk is that the euro loses its appeal to both sides.


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 03/27/2013 - 12:12 | 3381607 achmachat
achmachat's picture

all € are equal, but some € are more equal than others.

Wed, 03/27/2013 - 12:18 | 3381617 hedgeless_horseman
hedgeless_horseman's picture



all € are equal, but some € are more equal than others.

I have some Euro coins with the Guinness Harp on them that I am willing to trade for the "equivalent" Euro coins with the Nazi Eagle. What type of premium should I expect to pay?

Wed, 03/27/2013 - 12:19 | 3381638 Lets_Eat_Ben
Lets_Eat_Ben's picture

shouldn't gold be exploding?

Wed, 03/27/2013 - 12:24 | 3381655 Abraxas
Abraxas's picture

Why it hasn't yet is a mistery. Because of the madness of the crowds, perhaps.

Wed, 03/27/2013 - 12:34 | 3381686 Stoploss
Stoploss's picture

Template, Template, Template....  It's a template, considered a template, could be a template.





This is how you know they are making this shit up as they go along..

I will let that sink in a minute.

Wed, 03/27/2013 - 15:47 | 3382695 Pool Shark
Pool Shark's picture



"...while euro bank notes in Cyprus are still worth the same amount as in other countries..."

Only if you can get them out of the country.

[Good luck with that...]

Wed, 03/27/2013 - 12:52 | 3381719 Lets_Eat_Ben
Lets_Eat_Ben's picture

safety is still perceived as cash, bonds, stocks, even derivatives which are just wisps of paper bullshit.


I guess it takes a while for value to adjust to reality especially when the media is  force-feeding us BS.

Wed, 03/27/2013 - 14:21 | 3382238 bagehot99
bagehot99's picture

I would refer anybody who thinks cash under the mattress is a good 'last resort', to any random selection of Zimbabweans now sleeping under railroad bridges in Harare.

For perspective, imagine where Mugabe kept his stash - I'm prepared to bet that it wasn't in local currency, and it wasn't under any mattress anywhere in Zimbabwe.

Zurich, maybe.

Ogabe is so fucking ignorant, I'll bet he's got all his dough in FDIC insured banks here in the US.

Wed, 03/27/2013 - 12:24 | 3381659 walküre
walküre's picture

Gold will not explode unless China invades the US and declares an end to the favorite jew "confetti du siècle"

Alternatively it could explode the day that the Arabs run out of cheap oil completely.

Oil + Dollar + Jewish fractional reserve banking nirvana

Happy Fake Easter FWIW

Wed, 03/27/2013 - 16:16 | 3382826 Manipuflation
Manipuflation's picture


Thu, 03/28/2013 - 05:05 | 3384486 MSimon
MSimon's picture

You have found the fromt me. Who is behind the curtain?

Wed, 03/27/2013 - 12:24 | 3381662 agent default
agent default's picture

It is.  You  are looking at the wrong kind of gold.

Wed, 03/27/2013 - 12:25 | 3381667 earnyermoney
earnyermoney's picture

they'll explode after the CB's of the world restock their valuts.

Wed, 03/27/2013 - 12:43 | 3381729 walküre
walküre's picture

Where have you been? CBs are buyers already. As long as the confetti can be printed ad infinitum and without any consequences, the price will stay manipulated. Who is auditing the Fed? There are NO checks and balances anywhere.

The paper is a tool and it's created from thin air and its value enforced at gunpoint on the rest of the world.

How can the US recover economically from the shit that almost brought the global financial system to a halt and is coming out at the other end looking better than the rest?

It's time someone somewhere declares a war on the US and the USD. Unfortunately the elite will not fight for their own lives because Americans are being told they're the good guys and need to fight for Wall Street's cause. That's how it's going down.

Wed, 03/27/2013 - 12:29 | 3381680 redpill
redpill's picture

The spot price of gold is set by bankers.

Wed, 03/27/2013 - 12:39 | 3381700 walküre
walküre's picture

Russia and China are buying physical. Not that I'm a fan of either Russians or Chinese but I can't wait for the day that those two make an attempt to bring this Jewish American shit show to its knees. Maybe then can we rebuild and be free. FYI, Putin is purging Jew-Rossi oligarchs after expelling much of the Pseude Jews from Russia to Israel over the years. Nobody is blaming his policies for the apparent genocide in slow motion. That Russian oligarch money lost in Cyprus was stolen from Russia by the Jewish oligarchs.

In Russia there's no love for Jews it seems. U$srael having a cow over Russia's political protection for Syria and Iran. Makes sense. The Bear is prepping for a non-zionist NWO and if I'm understanding the tea leaves correctly, Germany is a partner of the strategy and maybe even the Euro. Hard to say at this point if this is a setup to get us rid of the pretentious and imperialist zionist USD dictat?

Wed, 03/27/2013 - 12:37 | 3381695 glenlloyd
glenlloyd's picture

euro faltering = dollar gaining = gold technically could lose value in us$. The fact that it's holding and gaining slightly with dollar rising is a reasonably good sign.

Wed, 03/27/2013 - 12:53 | 3381759 slightlyskeptical
slightlyskeptical's picture

Why would it go up when we are seeing currency destruction?

Wed, 03/27/2013 - 12:44 | 3381720 BLOTTO
BLOTTO's picture

Hey Gang - its me again - Blots...


The 'harp' symbol has its occult roots, just like the other occult symbology on other currencies around the world.


The harp is on Prince William's Coat of Arms.

(Harp of David)

Wed, 03/27/2013 - 12:45 | 3381730 PY-129-20
PY-129-20's picture

Would rather have one of these

and btw the Eagle was used on German coins and state symbols before the Nazis. They just recently made the Eagle so fat.

Yeah, these orderly Nazi-Robot-Germans, cold and emotionless...

Wed, 03/27/2013 - 12:55 | 3381764 BLOTTO
BLOTTO's picture



For consideration... i think the 'Eagles' which are used on many a national flags...German, US, Polish, Albania, Mexico, Ecuador, Eygpt, Russia, Austria, Serbia...

may actually be the mythical and occult animal the 'Phoenix'.


As symbolically shown at this years London Olympic Games...

Wed, 03/27/2013 - 13:08 | 3381815 zenmeister
zenmeister's picture

None, because it doesn't matter where they are minted. It only matters where they are kept...

Wed, 03/27/2013 - 13:14 | 3381838 Manipuflation
Manipuflation's picture

Expect to pay A LOT of premium.  I have seen the linked coin for sale online for years now.  I think it was used as door stop or as a shim.  I repatriated the Euro crap I saved years ago.  It just does not hold up well over time.  I am sure that there will be a market for it someday but it's not for me.

I might eventually have to buy this coin just to show some mercy.  Not today though.  A coin can have character but then there is the "what the fuck happened here" factor.  Don't get me wrong, I want it, but not at this ridiculous price.  Stong strike...from a hammer or sickle?  Both?

Wed, 03/27/2013 - 13:22 | 3381839 Ghordius
Ghordius's picture

hedgeless, come on, it's not a Nazi Eagle - Germany has always used the Roman Eagle that became the symbol of the reborn "Holy Roman Empire" since the year 800, as well as the Eagle used by Austria - and the American Eagle is derived from the Roman too, as much as the name of the Capitol, etc. etc. (see here Coat_of_arms_of_Germany - Coat_of_arms_of_Austria)


after years of financial propaganda from London, constantly complaining that the EU and the eurozone are monolithic, freedom-wasting blocs some should just recognize that both are confederations, and that the member states are sovereign, and so perfectly capable of doing what Cyprus is currently doing

which is against the EU and eurozone rules - except in an emergency, which Cyprus declared as such

knowing a bit Cyprus most of those emergency limitations won't work anyway, but that is a different story

if we would use gold you know what? the situation would be the exact same one

with the only difference that it would be more clearly silly to everybody to say "an ounce of gold is not the same because the Cypriot President is enforcing financial repression"

Wed, 03/27/2013 - 14:35 | 3382303 Nussi34
Nussi34's picture

Roman eagle??? Give me break. As a German I would prefer to call it Nazi eagle, it sound much tougher and longlasting than some mediteranian crap!

Thu, 03/28/2013 - 07:23 | 3384634 Ghordius
Ghordius's picture

the Roman eagle lasted about 1000 years - it's reborn HRE version lasted from 800 to 1806 - and you should know that the version on the euro coin has a nick: "Der Pleitegeier"

Wed, 03/27/2013 - 12:15 | 3381618 notbot
notbot's picture

I'm with Dalio. Ironically, the first major country to leave may be Germany.

And I still hate Krugman.

Wed, 03/27/2013 - 12:20 | 3381642 Abraxas
Abraxas's picture

Now, why would they ever wanna leave? They are running the surplus because of the Euro (DM would be by now at least $15). They get to boss everyone around. They get to posture and stomp and puff and huff and everyone is trembling just like Germans want to see them.

Wed, 03/27/2013 - 12:37 | 3381693 redpill
redpill's picture

By the time anyone officially "leaves" they all will already be gone in practice.  They'll claim the EU is still intact even when it's in pieces.  Denial is all they have left.

Wed, 03/27/2013 - 13:29 | 3381924 TheGermanGuy
TheGermanGuy's picture

The solution to the Euro-Crisis will be an territorial expansion of our tripple-A-rating...

Wed, 03/27/2013 - 13:28 | 3381912 Ethics Gradient
Ethics Gradient's picture

Apparently Easter is cancelled for the German parliament. See the Washington Post.

Just sayin'....

Wed, 03/27/2013 - 12:16 | 3381622 toys for tits
toys for tits's picture

This gives a whole new meaning to the term "bank hostages"

Wed, 03/27/2013 - 12:16 | 3381625 Skateboarder
Skateboarder's picture

All bankster assholes are assholes, but some are shittier than others.

Wed, 03/27/2013 - 12:12 | 3381609 Manthong
Manthong's picture

Some PIIGS are less equal than others.

heh heh..   great minds and all that :D 

Wed, 03/27/2013 - 12:17 | 3381630 espirit
espirit's picture

Going long metal detectors in Cyprus?

Wed, 03/27/2013 - 12:13 | 3381614 Dareconomics
Dareconomics's picture

Basically, Cypriot Euros are much less liquid than other euros.  Would you rather have €1000 in a bank account in Germany or in Cyprus?

Wed, 03/27/2013 - 12:50 | 3381748 Manthong
Manthong's picture

This is a hoot..  so tell me how liquid a euro in an insolvent EEE-YOO bank is?  

Wed, 03/27/2013 - 12:13 | 3381615 Shizzmoney
Shizzmoney's picture

I just learned that German Euros are separated from French Euros, Italian Euros, using a special serial number.

German using serial numbers to separate that sounds AWFULLY familiar!

Wed, 03/27/2013 - 12:22 | 3381648 DoChenRollingBearing
DoChenRollingBearing's picture

Euro notes (currency) from Germany have serial numbers starting with "X".

Wed, 03/27/2013 - 12:39 | 3381703 ParkAveFlasher
ParkAveFlasher's picture

So, we have a "quick and painless" conversion out of the Euro in terms of technical "execution", because the conversions are "baked in" via serial tracking of Euro notes and coins.  I.E. "We had xyz Marks in circulation which were replaced by xyz Euros of serial number X."  The implication here is a parallel tracking of "what a Euro of serial number x would be if it were a lira, or dmark, or ffranc, or kroner, or what have you".  The fx is thus already in place and can be pre-figured with some accuracy. 

If a country veers towards leaving or makes indications that they may leave the Euro, all Euro notes and coins of their given serial number (of the originally replaced currency) can be filtered out from the banking system (via a bank holiday in which banks actually, literally, remove the notes and coins of serial number X like children picking pennies from a can of spare change) so that the remaining Euros in circulation are not suddenly joined by their exiled Euro brethren from no-longer-member-nations.

The Euro cats are NOT dumb as it's being seen by most.  They are quite intelligent.


Wed, 03/27/2013 - 13:16 | 3381846 Z'
Z''s picture

Unfortunately I have no link, cannot remember where I read this.  But I do recall reading during the Greek turmoil a few years ago that people had begun to hoard the German Euros, foreseeing exactly what you describe.  The idea was that if there was a Euro breakup, the currency would be valued according to where it was minted.  Those holding the Euros of Germany were presumed to be sitting pretty.

Wed, 03/27/2013 - 13:28 | 3381911 smacker
smacker's picture

Euro coins don't have special markings or ID codes like paper notes.

They have something different: the B side contains a national portrait or whatever of the EZ member state, which of course makes them easily identifiable.

Wed, 03/27/2013 - 13:44 | 3381995 Pseudo Anonym
Pseudo Anonym's picture

dont forget the serialization is only for euro notes; not the 1's and 0's digital euro currency - which is the majority of the euro supply

Wed, 03/27/2013 - 21:34 | 3383920 ParkAveFlasher
ParkAveFlasher's picture

Digital accounts are even easier to tabulate.  They don't even have to be actually there.

Wed, 03/27/2013 - 14:41 | 3382342 DutchR
DutchR's picture

XP, i'm old school, ;)

Wed, 03/27/2013 - 12:28 | 3381676 kridkrid
kridkrid's picture

With an assist by IBM.

Wed, 03/27/2013 - 12:41 | 3381710 Rustysilver
Rustysilver's picture

Does IBM still uses punch cards.

Wed, 03/27/2013 - 12:31 | 3381682 ziggy59
ziggy59's picture

I believe many coins and paper Euros have country of origin, and serial numbers to designate such, no? Similar to our coins and bills, depends what mint/state, city they come from

Wed, 03/27/2013 - 12:38 | 3381698 Ahmeexnal
Ahmeexnal's picture

stack 1932 S quarters!

Wed, 03/27/2013 - 13:23 | 3381876 smacker
smacker's picture

Sure, each member state of the EZ has notes with its own code before the serial number for ID purposes. List of codes widely available.

Wed, 03/27/2013 - 12:15 | 3381621 Benedict Farse
Benedict Farse's picture

When Is A Euro Not A Euro? When it's a peon*.


*Peon (n.) - A debtor held in servitude by a creditor,

Wed, 03/27/2013 - 12:17 | 3381632 Lets_Eat_Ben
Lets_Eat_Ben's picture

Cyprus is a template for Euro fragmentation? ..hahahahaha!

Wed, 03/27/2013 - 12:19 | 3381641 Long-John-Silver
Long-John-Silver's picture

The only guarantee for Cyprus is a bank run.

Wed, 03/27/2013 - 12:21 | 3381646 astoriajoe
astoriajoe's picture

I remember driving across the midsection of the U.S. as a kid with the rest of my family.

Every once in a while something would happen with the car, and my dad would find a coat hanger on the side of the road to secure the tailpipe to the frame, or jam a stick somewhere to make sure something else was in place.

That's where we are now, duct tape and coat hangers are holding this thing together. I doubt we make it back home in one piece.

Wed, 03/27/2013 - 12:34 | 3381685 Skateboarder
Skateboarder's picture

The duct taping has only begun! I've built and maintained ramps that were in time magically skateable only because of the duct tape holding together ripped/cracked/frayed/holey masonite. And let me tell you, the skating can go on for quite a while with some sticky new tape. How much duct tape (bailout) will it take to make this ramp (euro) skateable? Apparently all the tape in the universe can't manage to do that. One hell of a ramp we got here boys.

Wed, 03/27/2013 - 12:59 | 3381761 Cognitive Dissonance
Cognitive Dissonance's picture

Ahhhh....your post brings back memories of the good old days in the Wagon Queen Family Truckster.

"All your duct tape and coat hangers are belong to us." - Bernanke

Wed, 03/27/2013 - 14:06 | 3382145 shovelhead
shovelhead's picture

*Dead Granny sold separately

Wed, 03/27/2013 - 12:21 | 3381647 Hannibal
Wed, 03/27/2013 - 12:24 | 3381651 Yen Cross
Yen Cross's picture

    When is the U.S.T. going to get in on that game. We can have 'Rust Belt $' , 'Northern Plains Crude $', ' South West Entitlement $', ect...  We can trade them like chits.

Wed, 03/27/2013 - 12:37 | 3381697 bank guy in Brussels
bank guy in Brussels's picture

Actually, for the first couple of decades of the US Federal Reserve, from 1913 until under Roosevelt, if I recall correctly

The US Fed actually did have SEPARATE INTEREST RATES for the different regions of the country

That is the whole reason there are 'Regional Federal Reserve Banks' ... Fed fiat 'money' was a different 'price' in different areas of the country, in Alabamy versus New Yawk

Back then I think there was no banking across US State lines ... and so in some ways the 'dollar' did have a different value depending on where you were

The system sort of continues today, with the US Fed having an internal 'TARGET2' type system ... they still account for 'dollar transfers' from one region to another in the US, and the Fed regions theoretically 'transfer gold' to make up imbalances ... not to say that they really have the gold they claim they do

Maybe when the USA breaks up into 10 or more pieces ... perhaps a few years after our euro-zone breaks up ... there will be different currencies once again in the US regions

Smaller and sovereign is indeed better

Wed, 03/27/2013 - 12:25 | 3381665 Legolas
Legolas's picture

In summation,


"The Euro is screwed"


Wed, 03/27/2013 - 12:26 | 3381668 ziggy59
ziggy59's picture

Everyone in Euro is equal...except when they are ruled by Banksters, then they are equal still, but less equal

Wed, 03/27/2013 - 12:41 | 3381712 HondaFullOfSilver
HondaFullOfSilver's picture

Some animal farm animals are simply more equal than others...    Komrade


Wed, 03/27/2013 - 12:26 | 3381669 Quinvarius
Quinvarius's picture

Thats okay.  I am getting a story every 5 minutes about how much Buffet likes banks.  Everything must be fine out there.

Wed, 03/27/2013 - 17:21 | 3383124 TruthHunter
TruthHunter's picture

"I am getting a story every 5 minutes about how much Buffet likes banks. "

He'll keep liking them until he cleans up his portfolio.

I remember when he said silver was a "good investment". If fell by half in the next few months.

All his charity giving won't keep the old liar out of hell.

Wed, 03/27/2013 - 12:38 | 3381678 Kirk2NCC1701
Kirk2NCC1701's picture

Need a southern and northern Euro.

The Euro was dangled to countries not fit to join, so that they'd also join fucking NATO. NATO was the real agenda, to push the borders ever closer to Russia, and surround it from all sides.

The old Guard of aristocrats (living in fashionable places in London, Paris and New York) wants Russia back. Old money (laundered long ago), old grudges, old connections, old clubs & societies -- all joined under a common purpose of greed and ancient/divine right of entitlement.

Wed, 03/27/2013 - 12:57 | 3381773 machineh
machineh's picture

The Euro was dangled to countries not fit to join, so that they'd also join fucking NATO.

And NATO is pushing to take over the British military bases in Cyprus.

Pure coincidence, of course.

Wed, 03/27/2013 - 12:32 | 3381684 mdtrader
mdtrader's picture

When is a stock market not a stock market? Answer when it's run by POMO's & Algos.

Wed, 03/27/2013 - 12:36 | 3381687 JimBowie1958
JimBowie1958's picture

In the final analysis all treaties and government forms and policies are only held in place if the oligarchs of each country choose to abide by them.

The key to a free and fair society for all is to first domesticate the oligarchs.

It seems that the days when western democratic nations and republics could reign these people in have come to an end. This means things will only get worse until a new government is imposed that can whip the oligarchs into line by threat of force, implying a slow degeneration until we change our form of government to something more authoritarian.

Now excuse me while I go washout my mouth with soap.

Wed, 03/27/2013 - 12:35 | 3381688 Lebensphilosoph
Lebensphilosoph's picture

I buy 2 euro from you for 1 euro. Then I take your 2 euro in a suitcase out of Cyprus. And now I buy 4 euro from you for 2 euro. Infinite money hack, bitchez.

Wed, 03/27/2013 - 12:35 | 3381690 DavidC
DavidC's picture

And it's still taking about $4 billion a day from Benny boy to keep the S&P and Dow up around their current levels - S&P back at 1560, Dow back over 14,500 again...


Wed, 03/27/2013 - 12:35 | 3381691 observer007
observer007's picture

Central banks continue to buy gold

 According to figures from the International Monetary Fund, purchases totalled around 20 tons last month.

Wed, 03/27/2013 - 12:39 | 3381702 Seasmoke
Seasmoke's picture

i guess a New York Dollar , should now be worth more than a Misssissippi dollar

Wed, 03/27/2013 - 12:40 | 3381706 Frank N. Beans
Frank N. Beans's picture

an earlier ZH article today said that you can still pull money out of Cypriot bank branches in the UK and in Russia because they are not under the EU banking umbrella.  So it seems to me that if you live in Cyprus, it would be worth it to get on a plane to the UK and get your goddam money out!!

Also heard that these capital controls affect British who have money in Cypriot accounts.  Again, this would be rubbish if you can pull your money out of a UK branch of a Cypriot bank. 



Wed, 03/27/2013 - 13:10 | 3381822 smacker
smacker's picture

I find this whole subject very odd.


It is true that any foreign bank in London abides by UK banking regulations, not those of its parent country. But IMHO that should not mean Cypriot-based account holders are able to withdraw funds from their Cyprus bank account from the London branch. Especially if the Cyprus branch has shut down all external transfers as they claimed to have done.

Wed, 03/27/2013 - 12:40 | 3381708 eclectic syncretist
eclectic syncretist's picture

Bernanke you fat fingered fuck, our order has been filled so stop the silver beatdown you stupid motherfucker.  I realize it's imperative to have an ignoramus who doesn't really understand what's going on behind the scenes running the printing operation, but I could find hundreds of brooklyn hacks who would be better counterfeiters than you, asshole.

Wed, 03/27/2013 - 12:47 | 3381735 negative rates
negative rates's picture

I think that went in one ear, and out the other.

Wed, 03/27/2013 - 13:01 | 3381788 smacker
smacker's picture

Capital controls in the Eurozone area are permitted under exceptional circumstances for limited periods but are prohibited under the Single Market Treaty.

Thus, IMHO Credit Suisse are slightly disingenuous to simply say they're legal under some other set of EU/EZ rules.

If they continue for any length of time, it must raise the serious issue of whether Cyprus remains part of the EZ even if it continues to use the same paper currency.

Wed, 03/27/2013 - 13:05 | 3381802 orangegeek
orangegeek's picture

The Euro is fine.  It's just going to be worth a lot less over time.


And the land of entitlements over the last 50 years while pilfering Africa (amongst other places) will have to adjust their expectations.

Wed, 03/27/2013 - 13:15 | 3381840 virgilcaine
virgilcaine's picture

The Dullar is the most hated thing on the earth and yet it goes up.

Wed, 03/27/2013 - 13:22 | 3381870 Kirk2NCC1701
Kirk2NCC1701's picture

That's also what feminists and lesbians say about the male penis.

Fuck 'em if they can't take a joke!

Wed, 03/27/2013 - 13:20 | 3381858 NoWayJose
NoWayJose's picture

There is absolutely no way to stop their bank run - any day or time that the banks are open, there will be a line eager to get their money out.  All the twisted rules and restrictions only serve to re-inforce the panic and destroy any confidence in the banks.  There is no Jimmy Stewart standing up in Cyprus to stop the bank runs.

Wed, 03/27/2013 - 13:35 | 3381940 Downtoolong
Downtoolong's picture

Capital controls will be lifted like the Fed will one day unwind it's balance sheet, as in maybe, possibly, somehow, someday, when monkeys fly out of my butt (credit Mike Meyers).

Wed, 03/27/2013 - 13:53 | 3382051 NoTTD
NoTTD's picture

If it walks like a template....

Wed, 03/27/2013 - 13:57 | 3382078 Mototard at Large
Mototard at Large's picture

Derivatives are financial weapons of mass destruction which could unwind during a crisis. Here is a simple explanation of what they are and why they can be both good and dangerous. It is written in plain language so a non-specialist can read it without a dictionary.  With the current “difficulties” in Cyprus about to spread, it will be curious to see if derivatives raise their ugly heads again. Who knows how much exposure the TBTF banks have once things unwind a bit?

Wed, 03/27/2013 - 16:13 | 3382812 smacker
smacker's picture


Based upon the examples in your linked article, I can see no reason for not banning all derivatives. None of the examples the authors quote (not even the trucker company) justify using them. In fact they should have never been allowed. Since they do nothing to improve the flow of capital into the markets which is what markets were intended for, but amount to greedy speculators and sheisters to gamble. And in the case of the financial institutions, place the global financial system at risk.

Wed, 03/27/2013 - 14:00 | 3382113 WallowaMountainMan
WallowaMountainMan's picture

"In fact, while euro bank notes in Cyprus are still worth the same amount as in other countries, in a market for euro deposits, a euro in a Cypriot bank account would now most likely not be trading at par with those of other member states."

i assume they mean non insured bank accounts.... so let's headline here...just the basics of putting currency into banks in amounts over a guarantee are an investment in that bank that generate a % return commensurate with that risk, including whatever the agreements are between the bank and their how fast one can withdraw the investment....kinda like, what are those letters...etfmmfmf and tbtf.....

"the risk of a bank run"

so, again, the under 100k crowd take out all their euros in paper, and as noted in the article: 'In fact, while euro bank notes in Cyprus are still worth the same amount as in other countries,...' so until the paper runs out, everything is aok. load up the paper printer and ship one there...or bundle some on a plane...of course that's happening guess. so under 100k, no problem.

over 100k....paying a big price for their education, i'd agree. hope the planet is paying attention so as to reduce it's downside on these risks...

not gonna cut anybody any slack, except for food and water, handed out, if it were my choice, prioritized for those who started with the least, and are suffering because of the lack of education on the part of those could have afforded it before...

there's more, but i've typed enough for now....

off to the wilderness...


Wed, 03/27/2013 - 23:25 | 3384210 ozzz169
ozzz169's picture

This is very interesting, so you have 2 forces driving the value of the euro in cyprus, first there will be a shortage of euros due to bank runs (they have been bringing massive amounts into the country to help) this should make physical euro's more valuable in cyprus, but then your going to see people trying to leave the country with them and put them in another country, implying they are more valuable out of the country. the euro's in the bank accounts now, are clearly less valuable then ones in foreign banks, so you have a discrepancy bank euros < physical euros. hence the cause of the bank runs. so the less euro's people are able to get out of the bank the bigger the discrepancy will be and the higher the demand for physical euros. all in all very interesting to watch, economists porn.

Do NOT follow this link or you will be banned from the site!