Gold Magazine June - July 2013, Issue 27 | Page 47

economy

“P

rovided that the
Government
implements everything agreed with
the Troika, Cyprus will recover
quickly from its
present problems.” This is the optimistic
view of financial economist Dr. Nikolaos
Georgikopoulos, Head of Information
Technology at the Centre of Planning and
Economic Research (KEPE) in Athens and
currently a Visiting Research Professor at
the Leonard N. Stern School of Business,
New York University. Georgikopoulos was
in Cyprus last month where he addressed
the 3rd Nicosia Economic Congress, organised by IMH, on “The Greek and Cypriot
Financial Crises” before granting Gold an
exclusive interview. In his latest presentation, he draws comparisons between what
happened in Greece and Cyprus but we
begin by talking about something that was
not applied in both cases: the controversial
haircut of deposits in the Bank of Cyprus.
“I was shocked and very upset when I
found out that they were originally discussing the idea of applying a haircut to deposits under €100,000,” he says, “because
there is a written commitment in the European banking system that clearly states that
depositors’ money up to €100,000 cannot be touched under any circumstances.
So I was totally against this idea. On the
contracts we all sign when opening a bank
account there is no small print saying that
if we are offered a particular rate of interest,
there is a possibility that our money will be
taken!”
In the end, the House of Representatives rejected the idea too and the haircut
was applied to uninsured deposits in the
Bank of Cyprus but Georgikopoulos was
not impressed. “I don’t agree with what the
Troika did,” he says, asking “Why didn’t
they use the European Stability Mechanism (ESM)? It was created precisely for
something like this. If there is a problem
with a European bank, the ESM is there
to provide a Financial Assistance Facility
Agreement (FAFA) programme to resolve
it. But they didn’t use it. Was it because
they wanted to ‘punish’ the Cypriot banking system?”

He is a little coy about answering his
own question, suggesting that if a decision is being taken by “a single powerful
country”, it can do whatever it likes for its
own benefit. ”Of course,” he adds, “if I was
placed in the position of accepting this or
facing bankruptcy, I would do what the
Cypriot government did and accept it but I
don’t agree with it as a way of resolving the
problem.”
Reminded that the decision was approved by Cyprus’ 16 eurozone partners
and not by a single state, Georgikopoulos
acknowledges that this was indeed the case
but he is adamant that under different circumstances, the haircut option would not
ha fR&VV