Perhaps the most underreported news to come out of Europe this
morning had nothing to do with PMI or employment or credit creation in
the Eurozone. It had to do with Cyprus - the insolvent island that
everyone forgot - and which since its March bail in has been left for a
state of Schrodingerian suspended animation, where it is either alive or
dead depending on what propaganda wave function it had to satisfy.
Recall that many, most certainly us, said that the imposed capital
controls would have no impact in stemming the massive outflow of what
money is left with the insolvent banking system, and very soon the
entire banking system would remain deposit, and thus funding, free
requiring more and bigger bailouts. Sure enough, this was just confirmed
when the Central Bank of Cyprus reported that not only did
local deposits drop to a level not seen since 2007, plunging by the
second fastest absolute amount in history, but declined at the fastest
rate ever!
And if the current outflow is not stemmed, there won't be a single Euro (Cypriot Euro, not European Euro) in deposits left in under one year.
Total Cyprus Bank Deposits:
Monthly Change in Deposits:
And rate of deposit change - biggest drop ever.
The good news for all other insolvent European peripheral countries is that the local depositor base is absolutely convinced that what happened in Cyprus is a one-time, non-blueprint event and have zero reservations about keeping their own deposits in place with the local banks, where they are perfectly safe and sound.
Source
Recall that many, most certainly us, said that the imposed capital
controls would have no impact in stemming the massive outflow of what
money is left with the insolvent banking system, and very soon the
entire banking system would remain deposit, and thus funding, free
requiring more and bigger bailouts. Sure enough, this was just confirmed
when the Central Bank of Cyprus reported that not only did
local deposits drop to a level not seen since 2007, plunging by the
second fastest absolute amount in history, but declined at the fastest
rate ever! And if the current outflow is not stemmed, there won't be a single Euro (Cypriot Euro, not European Euro) in deposits left in under one year.
Total Cyprus Bank Deposits:
Monthly Change in Deposits:
And rate of deposit change - biggest drop ever.
The good news for all other insolvent European peripheral countries is that the local depositor base is absolutely convinced that what happened in Cyprus is a one-time, non-blueprint event and have zero reservations about keeping their own deposits in place with the local banks, where they are perfectly safe and sound.
Source
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