Bernanke on Cyprus

Benaki“The situation in Cyprus is difficult,” said Ben Bernanke, chairman of the Federal Reserve, during a press conference in Washington D.C. However, as he said, the impact on the international economic system “has not been enormous,” pointing to the rebound on March 20, in the US and European markets.

Bernanke continued “I am aware that Cypriots struggle with a very difficult problem. I think the issue they face is that there’s a pretty big hole, a financial hole… So they’re looking for resources where they can find them. The restructuring of the banking system is also a possibility. We hope that the Europeans will come up with an efficient and equitable solution”.

Bernanke underlined that the crisis in Cyprus at this stage “poses no major risk” to the US economy.

Regarding the Eurogroup bailout decision to tax all of Cyprus’ bank account holders, he said “There is the issue of setting a precedent that might reduce confidence in banks in subsequent periods. There are a lot of uncertainties and difficulties, and there are questions about the way Cyprus is treated — what implications that might have for other countries and the like. So it does have some consequence.”