Lessons from Cyprus on handling debt crisis
Banks are rationing cash, European creditors are closing in — sounds like the current situation in Greece. But that was Cyprus, two years ago.
Even though their economies are different, Greece could learn some lessons from Cyprus.
Lesson one? Staying with the euro doesn’t mean a trip down easy street. Cyprus still struggles with high unemployment.
Lesson two? Listen to creditors, like the International Monetary Fund.
“Cooperating with the IMF paid off for Cyprus because, after two years they’re on the road to recovery,” says Charles Movit, an economist at IHS covering Cyprus.
“I don’t think so at all,” says Mark Weisbrot, co-director of the Center for Economic and Policy Research. He says Cyprus is still in bad shape.
“A lot of people have suffered,” he says. “They’re still unemployed. A lot of businesses went bankrupt.”
But Weisbrot and Movit agree on lesson three: limits on how much money can be sent abroad or taken out of a bank can help keep cash where it’s needed.
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