Draghi and Schauble at odds over Cyprus

LONDON (ShareCast) - European Central Bank (ECB) President Mario Draghi and German Finance Minister Wolfgang Schauble are at odds over the importance of a Cypriot bailout, according to reports.

Draghi considers the risk of Cyprus facing default to pose a danger for the wider Eurozone while Schuable does not consider it to be "systemically relevant", said German daily Der Spiegel.

Like Draghi, European Stability Mechanism President Klaus Regling and European Commissioner Olli Rehn appear to consider a Cypriot default as having greater negative repercussions than initially expected.

Joerg Asmussen, Draghi's colleague at the ECB Board, has taken a similar stance: "Disorderly developments in Cyprus could undermine progress made in 2012 in stabilising the euro area. Cyprus could well be systemic for the rest of the euro area despite its size."

A major concern is Cyprus's exposure to Greece (and vice-versa) as Cyprus's larger banks have an important network of branches in Greece. Bailing out Cyprus is valued at €17.5bn.

CP