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The Cypriot economy is facing a very bad scenario

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The package of new sanctions against Russia, which will be presented tonight to the leaders of the 27 member states of the European Union, includes options that lead to the complete exclusion of the Russian economy from the rest of the world.

Among Among the options is the closure of SWIFT, the global banking system for Russian banks. This is the most extreme, but also the most effective way to put pressure on Putin from those around him, who will risk being left without access to his funds.

These options directly affect the Cypriot economy, both in the service sector and in tourism. It is well known and obvious that in Cyprus a large number of companies provide services to companies of Russian interests, which are in danger of being found without object of work if remittances can not be executed.

Indicatively, based on recent data of the Central Bank of Cyprus for Foreign Direct Investment (FDI), the stock of incoming FDI, ie the money that entered the country, reached 388.814 billion euros in 2020, of which 101.962 billion. euros come from Russia. At the same time, the stock of outgoing FDI reached 399.313 billion euros, of which 134.422 billion euros went to Russia. It is understood that Cyprus, as a financial center, operates as a bridge for investment and this bridge will be severely damaged in the event of sanctions that will directly or indirectly affect Russia's economic interests.

On the other hand, the deactivation of SWIFT will stop the trading in dollars and the transactions between Cypriot and Russian companies.

If it is finally decided to close SWIFT, the implementation of the decision will require the approval of special legislation as swift is a private organization. The acronym translates into Greek as “Community for Global Interbank Economic Communication” and is based in Belgium.


An ECB spokesman was quoted as saying that “the ECB is closely monitoring the impact of the situation in Ukraine. At the March meeting it will make an overall assessment of the financial outlook. This includes recent developments in geopolitics. Sanctions are decided by the EU and European governments. The Eurosystem will implement them & # 8221 ;.

“We will target strategic sectors of the Russian economy, excluding its access to technologies and markets that are key to the country. We will weaken Russia's economic base and its capacity for modernization. “We will freeze Russia's assets in the EU and stop Russian banks from accessing European financial markets,” said European Commission President Ursula von der Leyen. The EU is acting in consultation with its partners and allies, the United States, the United Kingdom, Canada, as well as Japan and Australia. “
The EU High Representative said this morning that European leaders will be called upon to “The strongest and toughest sanctions package we have ever implemented”.
The EU and our international allies “must impose broad sanctions on Putin's oligarchic system, which enjoys the freedoms and privileges of the West. This system must dry completely economically. “We are united with the people of Ukraine,” said Michael Roth, head of the German Federal Parliament (Bundestag) 's Foreign Affairs Committee. >

European stocks plunged 3% this morning as investors sold risky assets following Russia's attack on Ukraine, raising fears that a war in Europe could fuel higher inflation and derail economic recovery. .
The pan-European STOXX 600 index fell 2.9%, to its lowest level since May 2021.
The German DAX index fell by 3.7% to the low levels of March 2021, while is under the greatest pressure amid fears of the country's heavy dependence on energy supplies from Russia.
The jump in oil prices helped the British index FTSE 100, which includes many commodity-related companies, reduce its losses, falling 2.4%.
The European index of oil and gas companies recorded the smallest decline between of industry indices, with losses of 1.2%, after oil prices jumped about 6%, driving Brent oil above $ 100 a barrel for the first time since 2014.
European banks with the largest exposure in Russia, including Raiffeisen Bank, UniCredit and Societe Generale, fell between 5% and 6.6%, while the broader banking index fell by 4.2%.
The ruble fell to a historically low level against the dollar.
The Moscow Stock Exchange reopened today after a temporary suspension of trading, diving almost 14%. The Moex index (in rubles) fell 13.97% while the RTS index (in dollars) plunged 20.16%.
The yields of the Russian 10-year bonds in OFZ rubles, which move against their prices, increased by 10.93%, the highest level since the beginning of 2016.
The largest Russian bank, Sberbank, announced that it has prepared for any developments and has developed various scenarios to protect capital, assets and the interests of its customers.
Meanwhile, the Central Bank of Russia said it would launch foreign exchange interventions and provide additional liquidity to the banking sector.

With information from RES- EIA, Reuters, AFP

Source: politis.com.cy

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