Mario Draghi Confronts Berlin Over Contagion From Cyprus Default

Leading European Union officials have warned Germany it would be a grave mistake to let Cyprus default or to impose losses on private creditors, fearing a repeat of errors made when Greece first flew out of control.

by Ambrose Evans-Pritchard
Telegraph.co.uk

Mario Draghi, the European Central Bank’s chief, said a collapse of EU debt talks with Cyprus or a forced restructuring would “undo the positive mood” that has calmed European markets since July.

Mr Draghi told Der Spiegel that Cypriot banks are big enough to pose a systemic risk to the eurozone. They conduct 40pc of their operations in Greece and are a key part of the Greek banking system.

In a jab at German finance minister Wolfgang Schauble – a lawyer – Mr Draghi said banking experts rather than lawyers should make the judgment on contagion risks from Cyprus. His comments came after Mr Schauble suggested that Cyprus is too small to matter.

Continue Reading at Telegraph.co.uk…

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