Couldn’t happen to us, could it? After all, Britain is nothing like Cyprus. Cyprus is a small island, far from the “action”, with contented natives who prefer not to notice as more and more of their wealth is bought up by oligarchically rich foreigners. Our banks don’t cripple themselves with out-of-control lending to those natives, presumably on the back of all those foreign investments. Oh.
The more I analogised, the more the only substantial difference I could see between Cyprus and Britain was the source of my ancient envy: the sun shines there, while it rarely does here.
There is of course a difference. It\’s called the Bank of England.
We have our own central bank, a central bank that can print as much money as it needs to. And will do in fact. For one of the duties of a central bank is to act as lender of last resort. And it was that very threat, that the ECB would stop acting as lender of last resort to the Cypriot banking system, that precipitated the crisis.
As is often said, a country that prints its own currency cannot go bust…..not until they get to Zimbabwe levels of stupidity that is, where they didn\’t have the hard currency for the ink.
If Britain were in the eurozone and were subject to the ECB then yes, it might be something worth worrying about. Outside, no.