Capital controls and a good-bank, bad-bank structure is what is now on the table. In spite of what may be agreed upon, I stated earlier today the losses will be bigger than currently perceived.
I am not the only one to come to that conclusion, Faz has some estimates in its report striking high cash outflows from Cyprus
Despite the closed banks and capital controls in the past week, more money flowed out from Cyprus than in previous weeks, according to payment transfers. Prior to the escalation of the crisis in Cyprus accruing on the payment system “Target liabilities of Cypriot central bank to the European Central Bank (ECB) had increased to a rate of approximately 100 to 200 million euros per day. In the past week, billions of dollars flew in spite of controls.
Withdrawals at ATMs have been limited to €260 per day but on Sunday the value was further reduced to €100 per day.
Cyprus lists accounts amounting to €30 billion in foreign currency, mainly dollars (86 percent) and pounds (6 percent). The investment bank Goldman Sachs estimated that this money belongs to foreigners, mainly Russians, Britons and Russians living in Latvia.
These holders of often very ample bank accounts now have a particular interest in getting money out of the country.
All accounts with less than 100,000 euros will land in the “good bank”. Other accounts will land in the “bad bank”. In the “bad bank” loss estimates range from 30 to 90 percent, depending on how quickly depositors try to withdraw money.
Supermarket Food Supplies Down to Two Days
In Cyprus, merchants demand cash, but suppliers demand cash only as well. With a shortage of cash, results are as expected: Cash Demands Impact Supermarket Shelves
SUPERMARKET shelves are in danger of emptying according to head of the supermarket union Andreas Hadjiadamou.
Supplies will only last two or three more days according to Hadjiadamou and there will be severe problems if a solution is not found and if banks remain closed.
According to deputy of the supermarket union, Nicos Athanasiou, problems had already started being noticed at certain supermarkets in Larnaca. “Most people are making purchases with a certain amount of care and caution, buying the basics,” he said. “Most consumers have been purchasing dry and canned food the last couple of days in case things get worse,” he added.
Athanasiou said there had not been a large fall in sales although in almost all of the supermarkets there were shortages of goods from suppliers who only accept cash payments.
Plenty of Fuel, Just Not Enough Cash
Cyprus Mail reports Plenty of Fuel, Just Not Enough Cash
SOME petrol stations may have to close down as they do not have enough cash to pay for fuel shipments, the head of the stations’ owners said yesterday.
“We may have to temporarily close some petrol stations because they have run out of cash. This creates great concerns to those in this profession,” said the head of the petrol station owners’ association, Stefanos Stefanou.
“Petrol stations pay for their fuel shipment only with cash and cash is running out,” Stefanou added.
“There are some petrol stations that are still accepting credit cards today, but tomorrow no petrol station will do so,” he said, asking consumers to take cash with them to carry out transactions.
Welcome to Insanity
Welcome to the insane world of fiat currencies and fractional reserve lending. If you are looking to assign blame, that’s where the blame belongs.
Regardless of where the blame is, the safe thing to do in Southern Europe is to get your money out of banks immediately. Nigel Farage says the same thing. For details, please see UKIP Leader Nigel Farage Says “Get Your Money Out of Spain While You’ve Still Got a Chance”
Mike “Mish” Shedlock