European bank rescues: Cyprus one year later

Posted: March 7, 2014 in economy
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Kidnapped by the Kremlin

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European bank rescues


Getting creditors not taxpayers to rescue banks seemed like a good idea, but it has not worked well in Cyprus

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NOTHING has infuriated taxpayers more in recent years than the bailing-out of banks. The cost has been colossal: €592 billion ($800 billion) of European taxpayers’ money went into teetering banks between 2008 and 2012. Moves to make such bail-outs a last rather than a first resort have therefore been welcomed. From 2016 losses from bank collapses in Europe will be met as far as possible by the banks’ creditors.
Cyprus has already provided a year-long test of this “bail-in” approach. The results are discouraging (see article). The economy is on course to shrink by 5% this year after a similar decline in 2013, and unemployment has climbed to 17%. Cyprus’s experience should serve as a warning against too violent a swing away from bail-outs, in Europe …

via Economic Crisis


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