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NEW YORK ( TheStreet) -- I could never have expected Cyprus could be the birthplace for so many very creative, world-changing ideas and bold, history-making experiments. Right after the Dijsselbloem Template for solving banking crisis the fair and just way, which was announced, promptly retracted, and consequently firmly stuck Monday, now we have an unprecedented capital control within a currency zone, for example, as reported by Reuters.
To summarize, the capital control measures mean flow of money out of Cyprus will be severely impaired, for (supposedly) seven days, but nobody expects it to end so soon.
What happens to the value of currency in a region where only inflow is allowed? It drops, due to sheer supply and demand imbalance even if not considering the inevitable risk aversion and panic. What makes this unprecedented and intriguing is that the currency is nominally the same inside and outside, the euro.
In other words, the euro will be worth less inside Cyprus than outside, quite possibly by a lot, depending on the success of enforcement (the more successful, the bigger the disparity) and degree of panic.
As the capital control is extended, inevitably, and the disparity between the Cypruro and the euro stabilizes, hopefully, it's only logical to give the Cypruro a proper new name, like, I don't know, Cypriot lira has a nice ring to it dontchathink?
This is too predictable to be exciting. Cyprus is lost cause. What's slightly more exciting is to speculate how this could be the template for the proper PIIGS and ultimate unwinding of the whole euro experiment. An awe-inspiring experiment it has been, a testament to the undying audacity of hope deeply embedded in humanity. We came. We tried. We left.
I did not expect the solution to come from Cyprus. It makes perfect sense, though, as the relative insignificance -- not to discount the enormous hardship and anxiety Cypriot people have been suffering over the past two weeks, and will continue to suffer -- of the problem compared to those presented by the infamous PIIGS (Portugal, Italy, Ireland, Greece and Spain). This makes it a better guinea pig for technocrats and politicians in various alphabetic soups of the eurozone institutions and foreign countries to try out a few ideas. If it doesn't work, at least they won't be kicked out of the office.