The short answer is: into the liquidity trap. Read more
Bruegel blog
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Where has all the (base) money gone?
25th March 2013
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What comes after finance in Cyprus?
24th March 2013
The prominent role of Cyprus's financial services is probably over anyway, irrespective of the actual content of the forthcoming agreement between the troika and Cyprus. I put together some simple tables showing the structure of the economy in Cyprus and in three other countries that suffered from massive banking crises during the past few years: Ireland, Iceland and Latvia (see a December 2011 policy contribution of mine comparing the adjustments of these three countries - "A tale of three countries: recovery after banking crises"). Here are some observations. Read more
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Capital controls in Cyprus: the end of Target2?
23rd March 2013
After the decision of last Saturday, an even bigger mistake is under way. Cypriot lawmakers have on March 22 almost unnoticed passed a restriction bill that allows the introduction of capital control. Read more
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Wealth distribution in the eurozone
22nd March 2013
The eurosystem has worked for a number of years now on a very comprehensive survey, called Household Finance and Consumption Network (HFCN). Data will be published in soon. Read more
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Chypre : calculs, cafouillages et émotions
22nd March 2013
Une bonne intrigue combine classiquement le froid calcul des acteurs rationnels, la dose de cafouillage nécessaire au réalisme, et ce qu’il faut d’émotion pour électriser. Les trois éléments se retrouvent dans le drame chypriote. Read more
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Options for Cyprus
22nd March 2013
Cypriot government official and parliamentary members face major choices in the next few hours: the European Central Bank (ECB) concluded that it will not be able to support Cypriot banks after Monday, the last day of the current bank holiday, if there will not be a proper agreement between the European lenders and Cyprus on a comprehensive adjustment programme that guarantees the viability of Cypriot banks and the sustainability of Cypriot public finances. Read more
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Effects of austerity revisited – how GDP surprised and why?
22nd March 2013
The debate about appropriate fiscal policy has been fluctuating since the onset of the financial crisis. Read more
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The Cyprus bailout controversy in German media and politics
22nd March 2013
We want to summarize reactions among politicians and German press views. The Eurogroup set up the details of a EUR 10 billion bailout package for Cyprus on Saturday, 16 March. This programme was heavily criticized in Germany, especially due to the tax on deposits below EUR 100 000. Yet, the Cypriot Parliament voted against this measure on Tuesday which is widely perceived as blackmail in Germany. Most commentators insists that Cyprus needs to come up with the agreed EUR 6 billion in order to receive the remaining sum from its European partners. Read more
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Europe’s Cyprus Blunder and Its Consequences
21st March 2013
The late Mike Mussa, a former Chief Economist of the International Monetary Fund, noted about some episodes of the late-1990s Asian financial turmoil that “there are three types of financial crises: crises of liquidity, crises of solvency, and crises of stupidity.” This quip comes to mind when considering the developments of the past few days around Cyprus. Read more
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No contagion from Cyprus so far
21st March 2013
The Cyprus drama has not destabilised the rest of the eruo area so far, despite the talks about a possible ‘Cyprexit’, i.e. an exit of Cyprus form the euro area. Read more
