It is clear that the ECB acted irresponsibly in Laiki disaster

Your article, “ECB Points Finger at CBC Over Laiki’s ELA”, sets out the European Central Bank’s (ECB) view that the  Central Bank of Cyprus and not the ECB was responsible for the ELA loan given to Laiki Bank with such disastrous consequences for this country (Cyprus Mail January 15).

However, the official Journal of the European Union indicates otherwise: “The national central banks….shall act in accordance with the guidelines and instructions of the ECB” (Protocol no. 4, article 14.3, Official Journal of the European Union).

A practical demonstration of the decision making power of the ECB on this issue was evidenced during the March 2013 negotiations. President Anastasiades was informed by the Eurogroup that he had only a few days to agree to their conditions or the ECB would cut off ELA to the Cypriot banks. This was the “gun to the head” the President referred to.

It is also clear that the ECB acted irresponsibly. Lending money (ELA) in an amount equal to over 50% of a country’s GDP to a bank (Laiki) which is in financial difficulty can hardly be considered prudent bank management.

 

Dr Jim Leontiades, CIIM, Nicosia

 

The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.