Posted by Joseph Cotterill on Jun 17 18:39. 22 comments | Share
It’s been a day of Argentine parallels to Greece, but this one is especially striking.
Alex Bellefleur of Brockhouse Cooper points out the following charts — one for deposit drains in Argentina back then and Greece now:
Which is fairly self-explanatory…
The other chart is very interesting. It compares deposits in Cypriot banks with those in Uruguayan institutions in 2001:
Argentines moved their money offshore to Uruguay during their country’s debt crisis. Uruguay got in a right old mess at the same time (trouble in the Brazilian economy in 1999 started it off) but Argentina’s default and imposition of capital controls led to serious problems by 2002. Argentine depositors scrambled for their money held in Uruguayan banks. The government quickly found itself in a liquidity crisis for its external debt, and thus a (successful) debt restructuring proceeded under IMF auspices. So successful, that some cite it as a model for Greece today. We’re probably well past when it would have helped, though.
Cyprus on the other hand…
The thing with Cyprus, is that it’s also a popular staging ground for offshore Russian cash, which has different reasons for staying or going than a Greek retail depositor, for example. At the same time, it’s quite well known by now that Cypriot banks are themselves exposed to Greek government debt. It’s not only tail-risk scenarios of Greece leaving the euro and executing its own corralito-type controls that matter.
Not a reassuring time to be a depositor overall, really.
Related link:
The humble Greek depositor, and the ECB – FT Alphaville
b2bville 