Cyprus actually left the eurozone

The plan to save Cyprus has been adopted and approved. Having sacrificed its offshore reputation, the island state avoided default: large Cyprus depositors will have to pay for the years of convenient form of work . And the European officials sighed in relief: the next threat of the collapse of the eurozone passed. But is it so? - The economists think. The different economic condition of the EUR zone makes you think: do they really have the same currency?

Economist Tyler Cowen is sure that in fact Cyprus left the eurozone, but reserved the right to call his “Euro” currency in order to preserve his face. The fact is that Cyprus plans to introduce restrictions on moving money from the country, which will be the reason for the “reduced” euro at the Cyprus bank in relation to the euro, for example, in a German bank.

“Control over the movement of capital should be really tough. What will be the price of Cyprus euros in this case in relation to German euro? 50%? I believe that Cyprus left the eurozone, but restrained the word “Euro” to keep his face, ” the Business Insider quotes from the Cowan blog.

Ed Conway, an economic observer at Sky News, wrote on the eve of the same thing: if hard control over the movement of capital begins, then Cyprus will lose its place in the global financial system.

“The euro in Cyprus will suddenly cost significantly less than the euro in Germany or, for that matter, in Greece. <...> If Cyprus refuses to freely move capital, then the next economic and logical step will be the departure from a single currency. ”

Raoul Ruparel and Mats Persson on Open Europe say the same thing:

“The money is no longer interchangeable between Cyprus and the rest of the Eurozone, and it is currently difficult to say that the euro in Cyprus is the same as in other countries of the zone. The real problem is not the introduction of control, but its termination: Iceland still controls the movement of capital, although five years have passed since it has been established. ”

Nobel laureate Paul Krugman in his column in The New York Times also writes about control over the movement of capital as about sunset of Cyprus:

“This will mean the end of a certain era for the country, which has spent the past decade, advertising themselves as a place where wealthy people who want to avoid taxes and control can without unnecessary questions and absolutely safely place their own funds. Moreover, this can mean the beginning of something much larger: the era, when the unlimited movement of capital was a desirable norm around the world. "