Cyprus Solution | One Out One In?

which wayIt’s all speculation at the moment. Greece has defaulted from paying an installment of their IMF loan, becoming the first/only country in the developed world to do so. Technically, only the lender can declare this a default and so far this has not happened. It seems difficult to see how Greece can continue in the Eurozone but at the same time it is difficult to see how it can leave. Its supply of notes has been greatly reduced but it still has notes in the banks and its reserves and shop prices are still in euros.

Rumour is that they’ll leave and issue drachma again, possibly valued at a an attractive rate to other more stable currencies, but it would be a currency you wouldn’t want to hold on for long. Which brings me to the theme of this article, will North Cyprus adopt the Euro?

TRNC President Akinci, on the way to meet the President of the European Parliament, Martin Schulz, said yesterday that the aim of Turkish Cypriots was to become a part of European Union institutions under a federal roof.

“The Turkish Cypriot community wants to be connected with the EU not as a minority but as one of the equal wings of the future federal state in Cyprus. We know what we want. We want a bi-zonal, bi-communal federal solution. We will be equal solution partners and we will be members of the EU within this framework.”

Forgetting the obstacles in the way of achieving a solution, what currency would the north adopt? We all know that Turkish Cypriots seem to lack confidence in the stability of the Turkish Lira and prefer to price in Euros or, failing that, Sterling or US Dollars. We are presently experiencing a situation where last year there were 3.6Tl/£1 and now it is 4.20TL, a 17% devaluation, but then last year the Euro exchange rate was €1.25/£1 and now €1.40, a 12% devaluation.

This makes it difficult and in the next few weeks both currencies are going to shift with the expectation that the Euro may equal the Turkish Lira’s instability again sterling. But then, the north may never be in a position to make this decision.

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1 comment to Cyprus Solution | One Out One In?

  • Polly Marples

    Bloody mess I you ask me. Two countries who have always been at each other’s throats in he same faeces.