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You realize that the banking crisis in Cyprus is much more serious bearing in mind that Greece needs additional capitals equal to 15% of the local economy to rescue its banks whereas this figure in Cyprus is 60%, but for the rescue of just one bank. The Greek banks are much more stable than the banks in Cyprus. There is no doubt that some of the debts of Laiki Bank will be transferred to Piraeus Bank, but they will not be a significant part of the "bad" debts. The developments in Cyprus will not have a direct negative impact on the Greek banking system. Indirectly, it not excluded that the instability in Cyprus may cause turmoil in Greece but this is the topic of another conversation.

At present, I do not think that the crisis in Cyprus will transfer to Greece. Here, anyway, other problems are waiting to be resolved.

So, let’s make it clear. Do you think that the money allocated from the rescue mechanism to recapitalize the Greek financial system will be enough after acquiring the Cypriot branches in Greece?

I do not think that there will be a problem. As is known to date, Piraeus Bank will provide 1.5 billion euro, 750 million euro of which will come from the Cypriot government after it receives the 10 billion euro bailout from Europe. I suppose that if Piraeus Bank expressed its interest in buying the Cypriot branches in Greece, it had the capital to do so. I do not think that there will be a new problem in the banking system of Greece, which is currently the case in Cyprus.

Greece is already obliged by the Memorandum of financial support. The country’s loan needs of support funding are met by 2016. I do not believe that the Greek banking system is at risk unless something extremely wrong happens in the programme to rescue the Greek economy.

Is there a risk for Cyprus to return to the pound?

Today is the first day after the agreement reached between Europe and the government of Cyprus and we can say that it is a shocking day for the citizens. It is reasonable to discuss in this situation various scenarios for the development of the financial crisis in Cyprus, including the return to the pound.

If we need to take a sober look at the developments, the return to the national currency would be much worse than the implementation of any programme of financial recovery. First, it is because the economy of the country will not gain anything if it returns to the Cyprus pound. Not only the economic theory but also the experience of Iceland proves this. In 2008, something similar to the present situation in Cyprus happened in Iceland - the country had a very large banking sector, which collapsed. The difference is that Iceland had its own currency.

The country allowed the three major banks to go bankrupt. The state started printing money to offset the losses of small depositors. It did not pay the losses of large foreign depositors, the majority of whom were British and Dutch. Furthermore, it imposed significant restrictions on the movement of capital until its economy recovered. Immediately after the bankruptcy, Iceland fell into a deep recession and inflation increased by 50%. As a result, the people who had small bank deposits may not have lost money but it was devalued by half. After three very difficult years, Iceland returned to positive growth.

I do not think in any case that Iceland's scenario is better than the development expected in Cyprus. The rescue of the economy of the country will follow the model of Ireland. There was a banking crisis there in 2008-2009 too. Unlike Iceland, Ireland was a member of the euro area and as a result, it was not able to print money. So, it applied a recovery programme with the help of the rest of Europe. After three years of hardships, Ireland is currently beginning to rise onto its feet and the first signs of recovery have been noticed.

In other words, the return of Cyprus to the pound will not help the country avoid recession. We know this from the experience of Iceland. The inflation will be very high too, which will lead to a much more drastic impoverishment of the people. Last but not least, the return to the Cyprus pound will completely isolate Cyprus in geopolitical terms. The country is currently part of the European family. If it leaves the euro zone, it will be separated from the European Union as well. The relations with Russia have been strained. Greece is now in a weak position and is unable to help Cyprus. This means that Cyprus will be left alone as a country in an area at stake and at geopolitical risk. You are aware of the problems with Turkey and the general tension in the area. By returning to the Cypriot pound, the country will lose all its allies.

Eurogroup’s president Jeroen Dijsselbloem had said that the model of Cyprus could be applied to other countries that were experiencing difficulties in the financial sector. In other words, it seems that Europe does not rule out the possibility of introducing the cuts of large deposits as a permanent measure to recapitalize problematic banks. Later, this statement was refuted but it had a negative impact on the market and caused turmoil. What is your comment?

I think that Eurogroup’s president started from the right basis but ended up in the wrong place. The statement itself was wrong and caused exceptional market disturbances.