Dijsselbloem, the Chair of the Eurogroup set the markets into free-fall, after stating that the Cypriot bailout was a “template for other Euro-area bailouts.” This comment of the Cypriot agreement being a precedent for future bailouts sent European bank shares crashing. However over the last 48 hours, hindsight has led to considerable backtracking by EU officials that in fact the Cypriot programme isn’t a template (Bloomberg).
The losses the haircut on deposits could be much higher than originally expected. Figures vary as to the total sum of funds held on deposit, and how much has already exited the country. The media is reporting that any sizeable amount of cash is being seized at airports and ports to stem the outflows, as depositors attempt to reclaim their funds.
The UK’s Office for Budget Responsibility (OBR) spoke before the Treasury Select Committee yesterday and gave a damming review of Chancellor George Osborne’s mortgage guarantee scheme. Unsurprisingly they highlight that by guaranteeing buyers mortgages it is likely to push house prices up and make the prospect of owning a home, unattainable for many more. The UK’s house market is two tiers, with a widening gap between the South East of England and the rest of the UK. The gap is set to widen with the CEBR, an economic think tank expecting the average London house price is to hit £500,000 by the end of the decade. (Telegraph)
In Cyprus, Big Losses Expected on Deposits - NY Times
UK banks have capital shortfall of £38bn – Bloomberg
China Said to Plan Letting More Foreigners Trade Stock Futures - Bloomberg
Mr Yen cautions on Japan's 'unsafe' debt trajectory - The Telegraph
Dutch minister Dijsselbloem has been back tracking on all his comments and suggesting things in hindsight
EURUSD is trading session lows at 1.2805