Almost like a bolt from the blue, the Eurogroup meeting of euro-area finance ministers, along with the troika of the European Commission, the European Central Bank and the International Monetary Fund, agreed on March 16 to a tax on all deposits in Cyprus, including small deposits. Read more
Bruegel blog
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Time for us to bank on a new Marshall Plan
2nd April 2013
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Blogs review: The when and how of exit strategies
2nd April 2013
What’s at stake: Markets trembled when minutes from the December FOMC meeting revealed that members had discussed the side effects of maintaining a $85 billion pace of monthly asset purchases and the timing of its potential end. Read more
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The Politics of Moral Hazard
31st March 2013
It is an old and a never-ending contest. On one side are the moral-hazard scolds, claiming that one of the major responsibilities confronting policymakers is to establish incentives that demonstrate that imprudent behavior does not pay. On the other side are the partisans of financial stability, for whom confidence in the financial system is too precious to be endangered, even with the best possible intentions. Read more
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With Cyprus, Europe risks being too tough on banking moral hazard
29th March 2013
Europe has long been far too tolerant of moral hazard in its banking system. But with the Cyprus plan, the pendulum may now be swinging too far in the opposite direction. Read more
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Large banks relative to GDP: is there a risk beyond Cyprus?
28th March 2013
Are other EU countries with large bank balance sheet relative to GDP also running a risk similar to Cyprus? The answer is no. The major reason for the banking troubles in Cyprus is the massive losses that the two biggest banks have suffered. But in other euro-area countries with big banking sectors this is not the case, as we show below. Read more
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It is not yet too late to drop the idea of capital controls in Cyprus
27th March 2013
The Cypriot finance minister Michael Sarris yesterday announced that Cyprus would introduce capital controls (see an FT report here). He announced that measures would be “very differentiated” according to the situation of the bank and as loose as possible in order to allow for a restart of the economy. Read more
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Capital controls will put the euro at risk
26th March 2013
The currency in Nicosia will no longer be worth the same as it is in any other country, says Guntram Wolff. Read more
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Blogs review: Big Data, aggregates and individuals
26th March 2013
What’s at stake: The Big Data enthusiasts compare it to a revolution. For the agnostic observer, it is interesting to move beyond this general and somewhat speculative discussion and get a sense of what these massive quantities of information produced by and about people, things, and their interactions can and cannot do. Read more
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Capital controls on Cyprus seem to have been avoided (or not?)
25th March 2013
As my colleague Zsolt Darvas has pointed out, the eurogroup agreement of last night looks pretty good given the circumstances. A number of very important decisions have been taken that need emphasizing. Read more
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The new Cyprus deal: victory of common sense
25th March 2013
The new deal on Cyprus does not only have the right intentions, but averts the two major flaws of the previous deal: It fully protects insured deposits up to the €100,000 amount guaranteed by deposit insurance in all banks, and It bails-in all bondholders and shareholders. Read more
