31 December 2014

Daily payment levels have been now set at EUR 1,000 a day, according to the latest diktat issued by the Administrator of the Central Bank of Cyprus, Dinos Christofides. Why he has cut the level – earlier set at EUR10,000, then EUR 5,000 and mostly recently at EUR 2,000 – he has not deigned to share with us. There are tens of millions of euros still held in the Central Bank of Cyprus (on which FBME continues to pay a penalty) and there is no danger of the bank becoming illiquid. So what is he up to? 

The original decision to set a maximum level was a big mistake if he had the intention of preserving relationships between depositors and the FBME Bank’s Cyprus branch. It just set up conditions for an eventual run on the Bank. Swapping the level around has just made it worse. Never explaining or justifying, the Administrator appears to make decisions on a whim harming the interests of its depositors. We now believe that the interests of 100,000 people have been directly or indirectly damaged by these decisions, giving the lie to the stated policy of the Central Bank of Cyprus at the outset of this deplorable incident that it was “protecting the interests of depositors”. That intention seems to have gone out of the window if indeed it was ever sincerely held.

It could become so much clearer if only the Central Bank of Cyprus, the body formed to supervise the affairs of banks and branches of banks in the Republic, would answer questions as to its actions and intentions. We posed a number of reasonable questions on this website on 31 October and before that on 10 September. In other countries, government agencies, even as august as the Central Bank, are held to account. Here, it seems the Cypriot banking supervisors appear to feel they are beyond such petty considerations.  Now that they are facing an international jurisdiction at the ICC perhaps they will have to become more loquacious.