This refers to the editorial “The Cyprus conundrum” (March 27). It is clear that all assurances about the safety of savings are flimsy. The question that now arises is how the island is going to pay back its huge remaining debt if one of its economic mainstays, financial services, is severely curtailed, and small businesses with legitimate deposits in Cyprus banks go to the wall. Economists like Paul Krugman feel that Cyprus should quit the euro because staying in the euro means an incredibly severe depression, which will last for many years, while Cyprus tries to build a new export sector. Leaving the euro, and letting the new currency fall sharply, would greatly accelerate that rebuilding. The crisis has shown – if any proof was needed – that far from restoring trust in the banking system, Cyprus has broken a taboo — by making it clear that euro zone leaders do not see small savers’ cash as sacrosanct.
M M Gurbaxani Bangalore
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