The folly of the Cyprus bailout

by Michael Collins, Investment Commentator at Fidelity

May 2013

Cypriots, already reeling from the toughest conditions tied to a eurozone bailout, then learnt from a Reuters
exclusive that their humiliation extended to the Central Bank of Cyprus being forced to sell three-quarters of the country’s gold reserves to help meet a shock 25% jump in their rescue bill.1 The gold sale was outlined in a leaked European Commission document on the revised, and since-approved, bailout for Cyprus estimated to cost 23 billion euros (A$29 billion), a sum that exceeds the 20-billion-euro GDP of
the Greek-speaking southern half of the partitioned Mediterranean island that is part of the eurozone.

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