Today's daily commentary is on Cyprus again. The latest information on Cyprus is that the ECB has told the Cypriots it could no longer extend the ELA facility being used by the now bankrupt Cypriot financial institutions. Cyprus has until Monday to find the funds to support their recapitalization or they will be cut off after the jump I will explain what led to this decision and what alternatives Cyprus now has.
The Cyprus banking system recapitalization problem has been known since June ever since Greek sovereign creditors received haircuts of up to 75% on their Greek sovereign bond assets last summer. Cypriot banks were heavily damaged by this and needed to be recapitalized. The Cypriot government stalled, hoping that events would be favourable as they decided on a course of action.
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.