Abstract
Soon after the crisis erupted, I felt it was important for the CBC to draw lessons from the crisis and put forward proposals to make the Cypriot banking industry stronger, more resilient and better suited to meet the country’s banking needs. To this end, in November 2012, the CBC appointed an Independent Commission to make recommendations on the long-term recovery of the Cypriot banking industry.
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Notes
- 1.
The Commission’s other members were: (i) George Charalambous who was a key figure in the Cypriot financial sector and served as chairman of the Cyprus Securities and Exchange Commission ; (ii) David Green, a leading international expert on financial stability matters with considerable experience in banking regulation and supervision at the Bank of England and the Financial Services Authority and (iii) Pierre de Weck, a senior Swiss banker with over 35 years experience in international banking, which included positions in Europe, North America and the middle east with Citibank, UBS and Deutsche Bank, where he was Global Head of the private wealth management division.
- 2.
I must admit that at the time I felt that the IMF ’s debt sustainability analysis was overly conservative. Specifically, they used a debt to GDP ratio of 100% as the sustainability threshold compared with 120% in the case of Greece . I had a heated argument over this particular issue with the IMF ’s troika chief of staff, Delia Velculescu. If the IMF had used a higher threshold, the bail-in would have been more limited and, arguably, the toxic fallout from that would have been smaller. Unfortunately, the IMF ’s view prevailed.
- 3.
In fact some of the staff at the CBC did notice well before the credit rating agencies started downgrading the sovereign but were either ignored or assigned other duties.
- 4.
‘BOC’s Skandalis: Ethics and profitability go hand-in-hand’, Business Mail, 20 November 2016. See: http://cyprusbusinessmail.com/?p=36085.
- 5.
Medvedev was paraphrasing Lenin who had justified the expropriation of capitalists’ property by the Bolsheviks by pointing out that they were taking away what had already been stolen.
- 6.
The mutual legal status of some (but not all) of the credit cooperatives could, in principle, have allowed imposing losses on their members (depositors and borrowers), although this would have caused another major shock without necessarily generating the amounts needed.
- 7.
See, for example, the commentary in The Economist: ‘The departure of Cyprus ’s central bank Governor: a blow to central bank independence ’. 10 March 2014. http://www.economist.com/blogs/freeexchange/2014/03/departure-cypruss-central-bank-governor.
Bibliography
Lascelles, David. 2013. Independent Commission on the Future of the Cyprus Banking Sector, Final Report, 31 October 2013. http://www.centralbank.gov.cy/media/pdf/LSE_ICFCBS_Final_Report_10_13.pdf.
Johnson, Simon, and James Kwak. 2010. 13 bankers: The wall street takeover and the next financial meltdown. New York: Pantheon Books.
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Demetriades, P. (2017). Lessons for Europe and Beyond. In: A Diary of the Euro Crisis in Cyprus. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-62223-1_18
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