Cyprus a Sign World Is Not Better: StanChart CEO
The Cyprus bailout chaos serves as a stark reminder that fundamental issues in the world economy are not yet fixed, said CEO of Standard Chartered Bank Peter Sands.
"It [the Cyprus bailout] acts as a reminder that the world has not suddenly got better," said Sands. "Despite the more positive mood in the markets, the fundamental issues of competitive and financial sustainability in the weaker countries of the euro zone have not gone away. Cyprus is a more dramatic example."
Global stock markets sold off after the announcement over the weekend that the 10 billion euro ($12.9 million) European Union bailout for Cyprus required bank depositors to pay a levy.
(Read More: Asia Stocks Hit Fresh Lows After Cyprus Levy)
The proposed tax , a never-seen-before method of tackling austerity raised fears of a potential bank run.
However, the Cypriot government voted against the levy on Tuesday. In an attempt to placate international lenders, Cypriot policymakers have now come up with a Plan B to secure the aid. This includes nationalizing pension funds, which hold between 2 billion and 3 billion euros, and issuing an emergency bond linked to future natural gas revenues to raise the 5.8 billion euros it was expected to via the depositor's levy.
(Read More: Cyprus Scrambles to Avert Meltdown)
StanChart's Sands warned on the potential unintended consequences of tactics that have not been tried-and-tested in the past, like the imposition of the levy.
"We are in unchartered territory with some of the measures that have been taken...The unintended consequences of these actions are quite difficult to work out," he added.
Cypriot banks have been shut since the weekend, to avert the threat of a bank run. They will remain shut until Tuesday after a holiday weekend, Reuters reported.
(Read More: Cyprus Shuts Banks Until Tuesday, Seeks Russia Aid)