Cyprus determined to keep place in euro area, president says

Special Case

Conflicting statements from European officials on whether Cyprus’s bailout is a special case or a template for future rescues have fanned concerns.

Luxembourg Finance Minister Luc Frieden warned against forcing depositors to contribute to bailouts again, saying it would encourage savers to send money outside the euro area, Der Spiegel reported, citing an interview.

Maltese Prime Minister Joseph Muscat said in a statement late yesterday that his government supports the “one-off measures undertaken with regards to Cyprus.” He said the size of Malta’s domestic banking system is below the euro-area average and is “robust.”

Slovenia’s pledge to continue austerity measures failed to stem a rise in bond yields to record highs yesterday. The cost of protecting Slovenian bonds with credit-default swaps surged 93 basis points to 411, according to data compiled by Bloomberg. That compared with 953 basis points for Cyprus.

“Two weeks ago, very few people knew where Cyprus was,” said El-Erian. “The issue is when the non-systemic case when added to another non-systemic case when added to another non- systemic case can become systemic.”

Bloomberg News

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