Cyprus News | Possible “Exit of Cyprus from the Euro Zone”

Cyprus News | Possible “Exit of Cyprus from the Euro Zone”

Could things possibly get worse for the Republic of Cyprus? Well yes, it seems they could and have. It is interesting that they were allowed to join the Euro mechanism as soon as they joined the EU. Subsequent events point to the fact that maybe they were not ready. ROC has still to meet the requirements of the EU to obtain the ‘bailout’ package and every day things worsen.

Those foreign purchasers still waiting for their title deeds could help the ROC coffers if the ‘powers that be’ would pull their fingers out. Revenue from any source must be welcome. Every cent helps.

Rehn: Disorderly default of Cyprus could lead to eurozone exit

European Union’s top economic official has addressed the debt and financial crisis in Cyprus, during an interview with the Wall Street Journal.

Speaking on the sidelines of the World Economic Forum in Davos, Ollie Rehn said a disorderly default of Cyprus could lead to an exit of Cyprus from the euro zone.

He said that a planned bailout programme for Nicosia must result in a sharp reduction in sovereign and bank debt levels, indicating that the country’s prospective bailout contributors don’t intend to lend Cyprus all the money it would need to resolve its government financing shortfalls and boost the capital of its banks.

“Our challenge, which we are very much aware of, is to combine a substantial reduction of the debt burden of Cyprus—both the sovereign and the banking sector—with the necessary ensuring of financial stability for Cyprus and its ramifications to the rest of the euro zone,” Rehn told the Wall Street Journal.

“Cyprus is a systemically important country for the euro zone…and it’s essential that everybody realizes that a disorderly default of Cyprus could lead to an exit of Cyprus from the euro zone,” he said. “It would be extremely stupid to take any risk in the current context of that nature,” he added.

Meanwhile, members of the Independent Committee on the future of the Cypriot banking sector will have a meeting with Troika (IMF, EC, ECB) representatives in mid February, in Brussels.

According to reports, during the meeting the Committee will discuss several issues related to Cyprus’ banking sector and will be briefed on Troika’s estimations about issues linked to the banking sector in a possible Memorandum of Understanding between the international lenders and the Republic of Cyprus.

Prior to that meeting, the members of the Independent Committee will have a meeting in London with experts, who have conducted a similar study on the banking sector, in order to exchange views and hear their experiences.

According to Cyprus News Agency sources, last week, the members of the Committee visited Cyprus in order to continue their contacts that began in November 2012 with various stakeholders and regulatory authorities who have or had a role in the activities of the banking sector.

Among others, the Committee met with members of the Cyprus Chamber of Commerce and Industry (CCCI) and representatives of the consumers’ associations. In addition, they met with Banks’ Internal Auditors and representatives of the Ministry of Finance.

Those meetings, according to a reliable source, were very useful for the Members of the Committee because they will help them to reach conclusions and provide suggestions on how to increase growth, competitiveness and stability of the Cypriot bank

The Committee, which was launched in November 2012, expects to produce an interim report in mid 2013 and a final report in November 2013. Both the interim and the final report will be published, while the final report will be handed over to the Governor of the Central Bank.

David Lascelles has been appointed chairman of the Commission and David Green, George Charalambous and Pierre de Weck are members. Cyprus applied for a bailout on June 25, 2012, after its two largest banks turned to the state for financial assistance having sustained a severe hit due to their heavy exposure to Greek bonds.” [Famagusta Gazette]

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