The crisis in Cyprus shows how ordinary people are learning to cope

Preparing for a catastrophe, is not the same as willing it to happen. It is the job of governments to prepare for disasters, however unlikely.

Hamish McRae
Tuesday 19 March 2013 17:26 EDT
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Protester against the tax in front of the Cyprus parliament
Protester against the tax in front of the Cyprus parliament (EPA)

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It is hard to extract any positive message from events in Cyprus, and the outcome will remain uncertain for some days yet. But if you stand back from the anger and fear quite justifiably sweeping the island, the monetary authorities should be in a position to learn from the experience.

There will eventually be an outcome – if not necessarily a solution. What we have seen is what happens when a banking system freezes. Last summer, the UK authorities were criticised for having contingency plans for getting emergency funds to Britons in Spain if the cash dispensers did not work. By preparing for a catastrophe, it was felt that we were almost willing it to happen. I don't think that is fair. It is the job of governments to prepare for disasters, however unlikely.

Well, we have now seen such a breakdown. To take a small example, we are flying euro notes out to pay our armed forces there. We and other governments, central banks, banks and businesses should all try to learn to do better next time. If Cyprus were to leave the euro, then we would have a live experiment of that, too.

The discouraging lesson is that official bodies are capable of spectacular incompetence. The encouraging one is that ordinary people are learning to cope.

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