Comment: Cyprus Controls Compared to Argentina

(See in situ)


Cyprus Controls Compared to Argentina

In Argentina, account withdrawals were limited so that the people could not spend their money before inflation had eroded its value. The government wanted first use and was trying to slow price inflation. It was a race against time.

Cyprus needs to control the capital because there isn't enough of it. People want cash, not to spend before inflation eats it away, but to store at home because they've realized the banks don't have enough. Not only do banks not have enough currency, they have insufficient "digital" currency because the value of their assets is insufficient to meet liabilities (deposits).

This can also happen in the rest of Europe as well as the US.