A Diary of the Euro Crisis in Cyprus
The book is in stock on Amazon in various countries in both hardback and Kindle formats (see below). If your country is not listed below, please try the Amazon global site or click here for your nearest Amazon store.
On Saturday, 16 March 2013, the world woke up to the news of an unprecedented levy on bank deposits that was to be applied in Cyprus – a euro area country on Europe’s middle eastern frontier with significant financial and political links to Russia – that was agreed as part of its long-awaited bail-out agreement with Europe and the IMF.
The levy was 9.99% for deposits over €100,000 and 6.75% for deposits under €100,000. Given that deposits under €100,000 are protected by deposit insurance schemes throughout the European Union, the levy instantly raised questions concerning the safety of bank deposits in Europe and sent shock waves to bank depositors throughout the continent.
The events that followed were even more dramatic. Cyprus parliament turned down the levy a few days later and Cyprus was left without agreement for an economic adjustment programme.
The ECB, in turn, announced that unless a programme was agreed by 25 March, it would cut off the supply of emergency liquidity to Cypriot banks, which by that time were pretty low on bank notes. Cyprus could not reopen its banks unless there was programme agreement. Unless if it did the unthinkable – euro exit, accompanied by a sovereign default and likely financial meltdown,
Although some Cypriot politicians momentarily flirted with the idea of abandoning the euro, common sense finally prevailed and on 25 March 2013 there was a new Eurogroup agreement with Cyprus that included massive banking sector restructuring and unprecedented bail-in of uninsured deposits. As a result of the bail-in, the island’s largest lender – the Bank of Cyprus – came under the control of Russian oligarchs, who turned out to be the owners of more than half the uninsured deposits in the bank.
FOREWORD
This book should be on every reading list to train future generations of monetary economists and Central Bankers. It is also a ‘must read’ for anyone interested in the euro-crisis of 2012-13 particularly, and in European recent political history more broadly. But beyond all that, it is a vivid and dramatic story.
Charles Goodhart’s concluding paragraph to the book’s foreword
The book, published by Palgrave Macmillan in 2017, tells the story of those dramatic days from the inside but also explains how Cyprus came to the brink of bankruptcy and exit from the euro.
Written by the former Governor of the Central Bank of Cyprus, Panicos Demetriades, who was in office during this turbulent period, this book shows how the crisis unravelled through a series of key events during his tenure.
Written in chronological order, and broadly based on the author’s personal diary, starting from his first day in office, this volume brings together economics, banking, regulation, governance, history, politics and international relations.
Presenting personal witness statements, including records of noteworthy telephone conversations, informal meetings and other milestones, it examines crucial questions like: How did Cyprus become so systemically important to the rest of the euro area? Why was Cyprus treated so differently in comparison to other peripheral countries in Europe? Why were bank depositors targeted? What role did Cyprus’ links with Russia play in the design of the programme? What has been the toxic fallout from the bail-in? Are there any longer-term implications for the euro? What are the lessons for regulators around the world?
The book will appeal to readers interested in financial crises, the euro’s architecture, the evolution of the European Monetary Union, and those with an interest in how Europe and the IMF dealt with crises in peripheral European countries.
Last but not least, the book will be of interest to anyone hoping to understand better the complex and multi-layered political and economic links between Russia and Cyprus, which go some way at explaining how Cyprus became embroiled in the ongoing investigations in the United States about possible Russian interference in the US elections.
The book is in stock on Amazon in various countries in both hardback and Kindle formats (see below). If your country is not listed below, please try the Amazon global site or click here for your nearest Amazon store.
Here’s a selection of book stores in other countries that also appear to have the book in stock (not an exhaustive list):
- Booktopia (Australia)
- Standaard Boekhandel (Belgium)
- Livraria Cultura (Brazil)
- Orange Centre (Bulgaria)
- Indigo Books and Music Inc. (Canada)
- Heureka (Czech Republic)
- PlusBog (Denmark)
- Ellibs (Finland)
- Lehmanns (Germany)
- Mayersche (Germany)
- Kenny’s (Ireland)
- HOEPLI.it (Italy)
- Van Der Nelde (Netherlands)
- Platekompaniet (Norway)
Bokus (Sweden) - Walmart (US)
Book reviews
“The Changing Relationship Between Politics and Finance in Europe” – Survival: Global Politics and Strategy by Erik Jones (June 2018 – click here for a PDF version)
“Book Notes: A Diary of the Euro Crisis in Cyprus” – Central Banking by Isaac Alfon (April 2018)
“The Virtues of Tedium” – Financial World by David Green (March 2018 – ReviewFW )
From Boom to Bail-in” – OMFIF Bulletin by Dr Danae Kyriakopoulou (January 2018)
“A Compelling Cautionary Tale” – MoneyWeek by Dr Matthew Partridge (November 2017)
Free documents:
Here I will be gradually adding various documents that I have cited in the book, which are already in the public domain, for easy reference. Below you will find the following documents:
1. Cyprus Independent Due Diligence of the Banking System carried out by PIMCO
Worth a careful read by anyone who wants to understand why Cyprus has one of the highest NPL ratios in the world. Contrary to populist myth, that isn’t the result of bail-in but rather the result of many years of poor lending practices. The report finds, for example, that problem loans for large corporates were around 60% in mid-2012.