Cyprus Banks Struggling to Open Tomorrow
According to sources in Cyprus the banks are working incredibly hard to re-open tomorrow but there is still a chance of a delay. The bailout has caused controversy as anyone with a deposit of over €100,000 will be charged possibly as much as 40% which could see people lose thousands of Euros over night. The public unrest is likely to mean there will be a run on the Cypriot banks and as a result we could see huge queues as people wait to get their money. I believe that we could see rioting and civil unrest when the banks open as it is possible people will not be able to withdraw all or possibly even any of their money as the banks do what they can to try and stay solvent therefore keeping the country afloat. If the banks do open tomorrow it could be a big day in the currency markets and could mean we see major GBP EUR exchange rate movement.
Bank of England Tells Banks to Raise More Capital
The Bank of England (BoE) is likely to tell the UK’s main banks that they need to raise billions more to be able to absorb potential losses. The BoE is clearly concerned that the UK and more specifically the UK banking sector will see difficult times again which means the Banks need to be guarded against clients defaulting hence the requirement for extra capital. This message from the BoE could put more pressure on the banks and reduce their willingness to lend money as a result in more pressure on the UK economy. This could mean we see more pressure on GBP exchange rates over the coming days which may mean we see the current spike against the Euro disappear very quickly.
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