Euro break up, Cypriot Euro trading begins

Well, effectively anyway. Via MR, a WSJ blog post on “distressed debt” type buyers willing to buy Cypriot bank deposits at a discount. This is the first step to arrive at an exchange rate between Cypriot and “core” euros. As I have said before, the imposition of capital controls and fear of a tax on deposits (equivalent to a change in the value of deposits in Cyprus banks vs. those elsewhere in the eurozone) have created a system where Cyprus has effectively left the eurozone. Not to mention the threat of end of TARGET2 participation which would have finally killed off the single currency. Now there appears to be the first steps towards trading Cypriot bank deposits. The legality of trading bank deposits is not clear. So this is still early days.

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