Future eurozone member – Latvia – will become very attractive for Russians seeking to redirect investments from crisis-struck Cyprus, according to Joakim Helenius, executive chairman at Baltic investment bank Trigon Capital.
“Latvia is in infinitely better macroeconomic shape than Cyprus and this will not be lost on Russians looking for safe places to deposit capital,” he says. Helenius adds that upon joining the euro, Latvia will be a part of the “hard bloc” of euro members rather than a Mediterranean problem case, reports Bloomberg.
It is also pointed out that Latvia will most likely fit the expectations of Russians who will soon be looking for a save place for their cash. “Joining the euro would make Latvia even more attractive to Russians seeking a safe haven for their capital in a politically stable and economically solid economy.”
As reported, Cyprus’ crisis-stricken banks may never be able to reopen if the country rejects the terms of a bailout, said Wolfgang Schaeuble, Germany’s finance minister.
The response came after the Cypriot parliament rejected an international bailout deal that would have imposed a one-off tax on bank deposits. Frantic talks are under way to try to agree an alternative plan. Not a single MP voted in favour of the controversial deal, sending a clear message to Brussels that the strategy needs a drastic rethink, BBC reported.
Meanwhile, the plan to tax bigger deposits at a higher rate has angered Russian investors who hold many of those larger deposits. Experts explain that the government fears the levy would force large investors to withdraw from the island, which would destroy its financial sector.
Source: Baltic News Network