Today's press conference with European Central Bank (ECB) president Mario Draghi seemed repetitive, with constant assertions that Cyprus is not a template (although he admitted that the ECB had made mistakes). Journalists appeared timid in their questioning of Draghi, and were described as almost deferential by some. There was not a single question on the capital controls introduced in Cyprus.
We now have a situation where the euro is no longer a single currency, making a mockery of the Eurozone. A euro in Cyprus is not worth the same as a euro in Germany. Allister Heath has written on the effects of capital controls:
Imagine if one couldn’t move money from London to Birmingham, and that there were therefore for all intents and purposes a series of regional pounds: sterling would no longer be a unified currency. Similarly, a Cypriot euro would no longer be a proper, fully-fledged euro, regardless of what the Eurocrats would like the rest of us to believe, at least for as long as these capital controls remain – and like all bad, oppressive laws, they will have a tendency to live on forever.
Draghi mocked commentators such as ZeroHedge for asking questions about what would happen in the case of a euro exit, yet appears to unwilling to tackle the hard questions (as least in public) himself. His message also appears increasingly contradictory:
Draghi April 2013: "the exchange rate is not a policy target"; Draghi July 2012: "Don't short the euro"— zerohedge (@zerohedge) April 4, 2013
Raging success for ECB/ €g/ Draghi. If can get away with botched plan for deposit grabs, murky resolution plans, Capital controls..— Faisal Islam (@faisalislam) April 4, 2013