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Posted on: March 27th, 2013 by AlYunaniya Staff No Comments

FM briefs government on implications of Cyprus crisis on Greek economy


photo: FM facebook

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Finance Minister Yannis Stournaras briefed Prime Minister Antonis Samaras and the coalition government partners on the possible implications of developments in Cyprus for the Greek economy ahead of the anticipated return to Athens next week of troika representatives.

Stournaras also met with the leaders of the main opposition parties.

According to Kathimerini sources, Stournaras set out three chief risks that Greece must avoid. The largest risk is of a bank run not only on the Greek branches of Cypriot banks, but also on all Greek banking institutions. Averting such a crisis is crucial to safeguard the recapitalization of Greek banks.

The second risky scenario involves the likely blow to the Greek private sector by the haircut on the capital of Greek businesses operating in Cyprus.

The third risk – that of a worsening climate in the Eurozone – is beyond Greece’s control but would have a negative impact on plans to privatize state assets and draw foreign investment and also on the geopolitical level if Turkey decides to exploit the temporary weakness of Greece and Cyprus.

Finance Minister Yannis Stournaras insisted yesterday that there were no plans to bail in depositors in other countries, as was the case in Cyprus. “The Eurozone is not insecure,” Stournaras said in response to a journalist’s question. “In fact, it was stated clearly at the Eurogroup that the solution chosen applies to Cyprus and not any other country,” Stournaras said, according to the media.

Cyprus is finalising capital control measures to prevent a run on the banks by depositors anxious about their savings after the country agreed a painful rescue package with international lenders, accoridng to Al Jazeera.

Banks are due to reopen on Thursday. European leaders said the deal averted a chaotic national bankruptcy that might have forced Cyprus out of the euro.



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