Cyprus bailout: Dijsselbloem’s U-turn creates chaos in the markets

 

Jeroen Dijsselbloem

Dutch finance minister Jeroen Dijsselbloem has rowed back on his statement that future bailouts would follow the Cypriot model. Photograph: John Thys/AFP/Getty

The good news for the eurozone was that the markets reacted well to the bailout deal for Cyprus. The bad news was that the rally lasted barely until lunchtime. By then investors were running scared at the prospect that the terms imposed on one of the single currency’s smaller members would be the template for rescue packages for bigger countries.

Credit for the change of mood goes to Jeroen Dijsselbloem, who chairs meetings of eurozone finance ministers and who decided it would be a good idea to go public with the idea that Cyprus was not such a special case after all.

For the past week the message has gone out that there are no comparisons between a country that allowed itself to become the tax haven of choice for high-rolling Russians and other, better-managed, members of the eurozone.

Then, in a couple of interviews, Dijsselbloem said Cyprus would be used as the model for future bailouts.

The comments were an open invitation to any investor with more than €100,000 in a eurozone bank to remove it without delay, which some then did.

 

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