Wednesday, April 3, 2013

Cyprus at the Little Guy Level

Banks are open in Cyprus, with strict limits on how much you can drag out of your account.  Currently? It's 300 Euro ($400 roughly).  You could walk in each day and take the 300 out and mount up a bank in your house.  Assuming things stay could in the months to come....have all your cash out, and then close your account.

Not to say here, that the ultimate desire of the general public is going this way, but the lack of trust is in the turbo  mode right now.

If this stays on track....I'd make a prediction by late fall that banking operations downsize and banks start to lay off their employees because there's just not enough accounts in local banks to keep operations going.  What you do as an unemployed bank employee?  That's a curious thing....there just won't be much of an alternate life situation to latch onto.

What the authorities started as a rule to control cash leaving the island was simple.  You fly are limited to 1k Euro on your person (roughly $1,300).  Passengers?  They probably aren't checking each and every one.....but there's a fair number that are being taken into a private room and checked out. If you are carrying more cash?  It gets becoming the government's money.

A waiver?  It's an odd thing....the government actually developed a waiver and you simply apply with paperwork to show what the cash is for, and they stamp it.  So as long as you ask permission....they seem to be working on an exit policy for Cypriot cash.

The odd piece to Cyprus and it's woes?  The government is working on a plan that has various segments.  One of the segments....since they know cash is being drained out of to overturn the casino ban that has been in place for years.  If the government starts a trend toward opening casino operations.....folks hoarding cash would be drawn to gamble with it.  The tourist angle might also fit well into the casino operation deal.

What you end up on a daily a cash-friendly operation.  Everyone feels more comfortable with cash.  I would suspect that people eventually get to a point where they all carry around a couple thousand Euro on themselves daily, feeling it's normal.   The new reality has arrived.

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