Banks to Prepare For Possible Cyprus Good-bye

The euro zone is now waiting to see how Cyprus will go along with their bailout plan, as debates for bailout plans begin to circulate, global banks and currency traders are now planning for the worse; they are developing plans for action if the European Central Bank really would have to result on removing itself from Cyprus banks, and kicking Cyprus out of the euro zone. If Cyprus does not think of a plan by Monday, then Cyprus would have to regulate the money coming out from banks when the reopen. Many believe that if Cyprus does kicked out of the euro zone, the global economy will take a downfall.

Cyprus getting kicked out of the euro zone would show the vulnerability of the currency, and if the value of the currency makes a significant drop, then banks such as the CIC (Chinese Investment Corporation) and other banks around the world with large amounts of euros in their system would see a great decrease on the value of their deposits. Since banks know that they will be largely affected, this negative affect is giving them an incentive to start an action plan early.

Written by: Jessica Ho
Source: The Wall Street Journal

Connaghan, Clare. (2013). Banks Dust Off Plans in Case Cyprus Leaves Euro. The Wall Street Journal Retrieved from: http://online.wsj.com/article/SB10001424127887323419104578376283901526750.html?mod=WSJ_economy_LeftTopHighlights

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