Financial Risks

Cyprus' bailout marks a turning point

The Governor of Central Bank of Cyprus Panicos Demetriades said in a press conference "a superhuman effort" is being made for the banks to open on March 28 and he also confirmed that a so-called haircut or levy on deposits over 100,000 euros ($130,000) at the stricken Bank of Cyprus and Laiki Bank would be 'around 40 percent.' Photo: AFP

What has set Cyprus apart is that it is one of the smallest members of the euro zone, with a failed banking system much bigger than its economy. Likewise, the €10 billion (HK$101 billion) rescue deal with international lenders, though more than half its GDP, is small change compared with the hundreds of billions in bailouts for Greece, Spain, Portugal and Ireland. But it marks a turning point in European leaders' approach to bailouts, with the balance of risk shifted from taxpayers to private investors.

Wednesday, 27 March, 2013, 3:09am

China ignores at its own peril its hidden debt risks

China is now experiencing an elevated debt risk characterised by high levels of accumulated local-government and corporate debt. Photo: Reuters

Since China's era of reform and opening up began, the country has experienced three instances of large-scale public-finance problems. In the late 1970s, it faced a debilitating fiscal deficit. In the 1990s, its corporate sector was plagued by "triangular debts". Later that decade, financial institutions were burdened by bad debts generated by state-owned enterprises.

26 Mar 2013 - 3:28am

China to tighten policies against financial risks

Beijing is likely to tighten policies to contain financial risks this year. Photo: Bloomberg

The expectation is shared by an increasing number of economists after the government work report, passed last week, noted financial risk for the first time amid anticipated higher financing demand in the year of government reshuffles.

20 Mar 2013 - 4:35am