Tuesday 21 November 2017

Finance ministers have turned Cypriot problem into a crisis

Brendan Keenan

Brendan Keenan

THERE was an insurance company at one time, which promised in its adverts not to turn a problem into a crisis. A pity they are not running the eurozone.

Its finance ministers have done just that: turned a problem – admittedly a tricky one – into a crisis. It is not yet a full-blown crisis of the kind we have seen several times since the Irish banking crash. Markets are spooked, not panicked. But it is a nasty crisis just the same, and it could get worse.

It is nasty because it is intensely political – and psychological. Cyprus is too small to matter financially. Its banking losses may be proportionately twice those of Ireland's, but its planned bailout was only a quarter as big.

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