By Daniel Eckert and Holger Zschäpitz - DIE WELT/Worldcrunch
For Wolfgang Schäuble, the world is sometimes a pretty simple place. Cyprus, for example, just had the wrong business model. Those were the words the German Finance Minister used to explain the problems that that European Union island nation is experiencing now.
According to Schäuble, the Mediterranean state counted too much on its banks and allowed its financial sector to get bloated. And indeed Cyprus’s banking sector, with its 47 billion euros in deposits, is two-and-a-half times the size of the country’s 18-billion-euro economy.
But Schäuble’s explanation is flawed: the beautiful island nation of 800,000 inhabitants is not the only country in the euro zone with a ramped-up financial industry. In no less than 10 countries, the volume of bank deposits totals more than real economic value – sometimes several times more.
Heading the list is not Cyprus, but the Grand Duchy of Luxembourg. The tiny country brings in less than 44 billion euros from its goods and services, yet its banks boast a whacking 227 billion euros in deposits, which is to say over five times the GDP.
Malta and its 7-billion-euro economy is home to nearly 12 billion in deposits. Other countries with significant deposits are the Netherlands, Spain, Belgium and Portugal. Even Germany’s 3.1 trillion euros in bank deposits exceed actual economic performance….To Read More….
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