Cyprus is increasingly likely to seek European aid to deal with the impact of the Greek crisis on its own banking system, the country’s central bank governor, Panicos Demetriades, has told the Financial Times.
Cyprus Popular Bank needs at least 1.8 billion euros ($2.2 billion) by the end of the month to meet European demands that the bank recapitalize.
Recourse to the European Union is very likely. “Clearly the closer you get to the deadline the less unlikely it becomes,” he said, adding that the country was facing “an important crunch time.”
Michalis Sarris, Popular Bank’s chairman, also suggested the country had little alternative. He told the FT: “It is hard to see where[the money]is coming from, if not Europe,” noting that “appetite to lend to Cyprus has dried up for many months now.”
He added: “There is a backstop there and the backstop is the European Financial Stability Facility and that backstop will be used if necessary.”
How desperate are these EU countries, such as Cyprus?
Sarris noted Cyprus was in talks with European authorities in a bid to extend the June 30 deadline until the end of August. Does anyone seriously think that kicking the can down the road by 60 days is going to result in a better solution for Cyprus?
Sure, postponing a problem always beats solving a problem, hands down. Ostriches do it. Have you ever tried to crack an ostrich egg?
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