As noted to subscribers in my January report, it looks as though Cyprus is already suffering from the risk I had identified as “reputation contagion”, a risk that has more to do with perceptions than fundamentals but which can have very serious consequences.
Last week the international economic news was dominated the €1 trillion bond-buying by the European Central Bank (ECB). The ECB will buy bonds on the secondary market (ie from banks and other financial institutions) of countries with an investment-grade credit-rating.
Sapienta Country Analysis Cyprus, August 2014
Political analysis and outlook The minority DISY-led government has faced fierce resistance to a bill to speed up foreclosures on non-performing loans (NPLs) that is due for a parliamentary vote on 5 September. There are hopes that the autumn period will see a revival of the slow-moving negotiations to resolve the Cyprus problem but we believe that there will be no significant progress until after the Turkish Cypriot presidential election in April 2015.
If the foreclosure bill does not pass before the EU-wide stress test deadline, this could be a catastrophe for Cyprus that will be even worse than the one we narrowly missed last year. Those who look at a modest debt repayment schedule in the next few months are missing the point. It is not a default on debt payments that we need to fear; it is the collapse of three banks. Here are the reasons why.
* A confluence of inter-related causes * SPECIAL REPORT: This time a year ago it looked like Cyprus was on…
All we are saying … is give BOC a chance * Time to put the money back in Bank of…