Spain’s minister warns Cyprus crisis could spread

Spanish Economy Minister, Luis de Guindos, said at Sunday’s emergency meeting of finance ministers, that unless countries including Spain reached a ‘conclusive decision’ the Cyprus crisis could spread to other European countries. He added, that there could be an ‘undesirable situation for the whole of the Union’ if they fail, El Pais newspaper reports.

‘Problems in Cyprus go well beyond the Cypriot economy,’ he added, before attending the Eurogroup meeting.

The Spanish minister said that 10 days ago, when the Eurogroup met to establish a levy on all Cypriot bank deposits to finance the bailout, including those below €100,000 (the limit under which savings are, in principle, guaranteed in all European countries) Spain opposed the move.

Following that controversial decision, the Cypriot authorities proceeded to freeze all bank accounts on the island to prevent a massive capital flight. This is an unprecedented move in Europe bringing back memories of what occurred in Argentina during 2001 to 2002.

So far, the crisis in Cyprus has not prompted any flight of bank-deposits from Spain, the  economy minister said in an interview on Sunday with Spanish newsagency Europa Press.

Luis de Guindos said that the problems facing the island were exceptional and unique. ‘To generalise the Cypriot situation to other economies in the eurozone is completely out of place,’ he said during an interview .

Cyprus’s crisis has put the spotlight back on the eurozone’s weaker members, such as Spain and Italy.

The minister also said in the interview that Spain had ‘absolutely’ ruled out asking for international aid to help with its economic problems.