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Cypriot Bank Chief Says Money Won't Flee

Panicos Demetriades
Panicos Demetriades

While Cyprus is keeping a tight rein on depositors and limiting how much they can take out of the bank, apart from those who apparently have found a way around capital controls, the risk of a run on the banks is over despite confiscation of up to 80 percent of those with more than 100,000 euros ($130,000) Central Bank of Cyprus Governor Panicos Demetriades told the Financial Times.
“Once people realize how well capitalized the banks are, there is little reason why there will be deposit flight,” the central banker said, according to MNI, which cited the interview. He didn’t mention that the banks are keeping most of other people’s money although he stressed that controls must be lifted “gradually”.
Big depositors in the Bank of Cyprus will lose at least 60 percent of their money which the government is seizing to appease international lenders putting up a 10 billion euros ($13 billion) rescue package. They will get shares in return for some of their money although analysts said those could be virtually worthless.
Demetriades, who is also a member of the European Central Bank΄s Governing Council, added that the buffers created from the uninsured deposits in the Cypriot bank would be “very substantial,” but unlikely to be needed.
 

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