Cypriot Bailout Sends Shivers Throughout the Euro Zone

Re:Cypriot Bailout Sends Shivers Throughout the Euro Zone by pavlov on Sunday March 17, 2013 @06:40PM (#5391394)

The linked article is about ECB buying government bonds. But the ECB also buys bonds from Eurozone commercial banks, and this is where new money is being created.

It does end up on the central bank's balance sheet, but there's no event that would force the bank to ever write it down. Those hundreds of billions in loans can stay unpaid for hundreds of years if necessary.

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Re:Cypriot Bailout Sends Shivers Throughout the Euro Zone by justincormack on Sunday March 17, 2013 @06:58PM (#5391449)

All the lending to commercial banks is secured lending, they have to provide collateral to the ECB. The less good quality stuff is lent by individual central banks, so governments underwrite it. There is no unsecured buying of bank debt (banks can use covered bonds as collateral but again that is secured). And the LTRO is only three years. So it is not like you suggest at all.

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Re:Cypriot Bailout Sends Shivers Throughout the Euro Zone by pavlov on Monday March 18, 2013 @03:28AM (#5392901)

Thanks and sorry, I was clearly misinformed. I must have taken some "stuff they say on the Internet" at face value.

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