Saturday, March 23, 2013

Cash Only in Cyprus

It was very much unavoidable. As of right now, people in Cyprus are hungry for hard cash. For paying in gas stations, even groceries, suppliers want cash. Milk and medicine for your child? Cash only.

The problem isn’t just bank accounts being frozen and cash becoming a rare commodity as ATM become empty. Suppliers and business owners want cash because it’s the only way to keep it out of the blood sucking banks that just stole a cut of people’s money!

Reporter’s Notebook: Worried CypriotsScramble for their Money

How many times have you read it here? You must have at least one month’s expenses  worth of cash, and more is better. The simple matter is, no banks can survive a bank run. Doesn’t matter what bank it is and what country you’re thinking of. If everyone tries to close their accounts at the same time people will realize that there’s hardly enough cash in the average branch to cover 1% or 2% of the deposits, let alone everyone at the same time.

These days, you just never know and you’ve got to be prepared. There’s always great excuses to freeze people’s accounts. It could be a glitch in the system, a bailout “tax” or a cyber-attack from China.  In the current unstable economy that we all live in, you simply need to have enough cash to get by if banks close.



Anonymous said...

Hello! What do you think about keeping your money and valuables in a deposit box inside the bank? As keeping valuables at home seems risky, you could get robbed and loose everything.

Anonymous said...

hi ferfal,

I have one important question :
why did the argentina government not confiscated the gold of people?

They didn't have records of who buyed some before the crisis? Or they didn't care?

Another question : now that you are in ireland ( eurozone + country receiving bailout), what are you going to do?staying here or going outside of eurozone?


k said...

The real benefit of keeping valuables in a safe deposit box in a bank, and not at home, is that only your box could be violated if a robber or government agent comes to take it.

The economy in Cyprus is poised for collapse. Sure, cash only still works. But the prices could suddenly shift. Gasoline and alcohol could quickly double or triple in price. Some things are likely to get much cheaper, like movie tickets and haircuts. Why work if you are not going to get paid, and even if you get paid, can you buy the things you want or need with the money? Smugglers have a great opportunity to get really rich, especially if certain Russians hire them to distribute arms free of charge to the regular cypriots who have had enough.

Anonymous said...

Hi Ferfal, We just started to put aside some emergency cash and this is an unfortunate reminder to keep going until we have enough stashed. I enjoyed the book and appreciate the smart ideas about safety.

Anonymous said...

It is not without irony that small countries like Cyprus get into such Faustian deals to enter in the EU: in the hopes of joining the club of so-called developed countries, they imitate foreign habits at the expense of their cultures, they ditch their religion to adopt the religion of "enlightenment", they trash their sovereignty for a dish of lentil soup. Alas, after selling their souls, they find out that, under the glitter, the EU is just another third-world rate government, whose constitution was imposed, which applies the laws capriciously depending on who it is.

Anonymous said...

Rush to cash was exactly what happened in Brazil in 1990, when the newly elected president froze all bank accounts, except for a $50 individual allowance. Shelves went empty in the stores, but the street markets were plentiful, at least to those with cash. Companies cut the working hours - and the salaries - and started laying off. All the official grand-standing didn't last too long, but not after wrecking millions of lives.

Don Williams said...

1) Re Anon at 2:40 Am:

I think that good quality floor safes are strong enough to protect $10,000 or so kept at home --provided you keep quiet about them so no one knows you have them. IN the USA they are used to keep cash deposits by stores, gasoline stations, etc that are open late at night.

Having 2 or 3 would provide even more security --if you embedded each one in a 3 foot ball of concrete.

Warning: The common floor safe by Sentry does not have an insurance rating and I have heard it is made of inferior aluminum --vice the hardened steel that you need to prevent cutting. Plus you need to seal a floor safe with a covering that will keep out water if the basement floods --e.g., if house catches on fire and firemen spray fire with high volumes of water.
For currency, you might also want an inner fire-resistent container to protect against house fire.

See e.g,

I would think that most countries have safes of one kind or another for use by the local small businessmen. Check with some of those businessmen or the telephone directry.

An alternative approach is to disperse the money among several secret hiding places (in the walls,etc.) Or to put it in a sealed pvc pipe and bury it.

Don Williams said...

1) One thing that NONE of the news sources are discussing is: where did the money in the Cyprus banks go and who is responsible?

2) Best I have been able to tell is that it was invested in Greece --but who benefited? I find it hilarious that Cyprus's Finance Minister was the CEO of Laiki Bank
when it suffered massive losses.

3) What is also not be made clear is that it was not the Germans who were moving to impose the 6.75% tax on small depositers -- was Cyprus President Nicos Anastasiades trying to protect his rich Russian friends.

All the EU was saying was that if it came up with $10 billion euros to help then Cyprus needed to come up with around $7 billion on its own. How Cyprus did that was left up to Cyprus -- and Anastasiades was trying to screw the little people instead of the banks bondholders and uninsured Russian depositors.

4) Not that I am In any position to criticize -- Bush and Obama did the same thing here in the USA . Except that the American people were too stupid to realize what was going on. They evidently think the tooth fairy is going to pay that $11 Trillion in debt ran up since 2001.

Don Williams said...

Correction: Christos Stylianides, CEO of Laiki Bank , is the current
Cyprus Government Spokesman, not its Finance Minister.

Note the irony of him calling on the little people to sacrifice for the good of Cyprus:

KeithC said...

@Anon: "What do you think about keeping your money and valuables in a deposit box inside the bank? As keeping valuables at home seems risky, you could get robbed and loose everything."

If there is a "bank holiday", it's not just ATMs that are buttoned up. You valuables will be safe - for the bank. You will have no control over the items' disposition. So, in other words, you could *still* get robbed and lose everything. The robber, however, would be far better dressed than the average street thug.

Greek Caste System said...

"It could be a glitch in the system, a bailout “tax”..."
Fernando and the American readers of this blog start to understand what I've been saying for months: Taxes in the Eurozone play the role of inflation in Argentina: They don't want to inflate Euro but they raise taxes. Prepare for a tsunami of taxes, if you live in Europe.
In order to survive you will be forced to be a tax evador: Welcome to the Mediterranean club.

George Henson said...

The 9 largest banks in the United States have over 228 Trillion worth of derivative exposure with only a fraction of reserves to back up any bad bets. The federal reserve is printing over 85 billion per month to cover the bad bets over the last 20 years. As the U.S. prints money the rest of the world has to do the same thing or they run the risk of having there currency become to strong in relation to the U.S. dollar. This will only reduce their exports and make their currency to expensive relative to all other world currencies. All the worlds central banks are tied to the federal reserve and all are controlled by the same few families. How long do you think it is going to take before this house of cards collapses???

gaga said...

Cyprus bought more and more Greek bonds because the yield was very high (25% at one point). They were then able to offer higher interest rates so attracting Russian money (no questions asked), enabling them to buy more Greek debt.

They lost a lot on Greek bonds.

Anonymous said...

I wouldn't trust bank safety deposit boxes to keep your stuff safe from a thieving government. Several years ago, Scotland Yard (in the UK) made a massive raid on safety deposit boxes in an attempt to crack down on illegal guns, drugs, money laundering, etc. To make matters worse, the raids were indiscriminate; they drilled opened every safety deposit box and took whatever they found there. If you wanted your stuff back, you had to /prove/ that it was acquired through legal channels. What this meant was that many people who had come to England as refugees (e.g., fleeing the holocaust) and had all their life's savings as precious metals and/or gems that had been in their family for decades lost everything or had to spend big money on lawyers to get their stuff back.


Anonymous said...

Once again, people are so wedded to the idea of "hyperinflation" and dollar destruction that even when Cypriots can't get any money, there's a comment about how prices might rise dramatically.

The economy is starved for money and prices might RISE? In what alternate universe?

The Cypriot who quietly turned all his bank deposits to cash in the weeks and months prior to this crisis is seeing his buying power rise dramatically as sellers are desperate for it and prices no doubt plunge. Either that or other Euro-zone speculators are rushing to Cyprus with cash in hand to shop at the fire sale.

Anonymous said...

"What's amazing here, I think, is how small Cyprus is and how relatively small the problem is. The bailout total, that you mentioned, is about a quarter of Apple's cash-on-hand. I mean, this is one country that Apple could purchase. It could own the island and call it, you know, iCyprus, or something. And have all this cash left over."

-- Charles Krauthammer on “Special Report With Bret Baier.”

Read more: