Eurogroup demonstrates how not to calm fears about Cyprus

Jeroen Dijsselbloem nearly ruined everything.

Good news! Jeroen Dijsselbloem, chair of the group of eurozone finance ministers, nearly accidentally killed the euro yesterday.

In what Reuters blogger Felix Salmon described as a "formal, on-the-record joint interview" with Reuters and the FT, Dijsselbloem managed to suggest that the Cypriot bail-in was, in the words of Reuters' Luke Baker, "a new template for resolving eurozone banking problems".

Dijsselbloem said:

What we've done last night is what I call pushing back the risks… If there is a risk in a bank, our first question should be 'Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?'. If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders.

The tenor of Dijsselbloem's comments certainly suggests he meant them to be generally applied. And, on paper, it's a good ranking of priorities: first you get the bank, which caused the problem, to claw back as much as it can, then you talk to the shareholders and bondholders, who have knowingly taken a risk on the bank's solvency, and then, you talk to depositors. Because depositors are, after all, just people who have loaned money to the bank in a different form; and if they're uninsured, they've always known there was a risk of losing a lot if they bank went under.

Unfortunately, this is precisely the sort of thing that you aren't supposed to say. Because the obvious outcome of explicitly stating that uninsured depositors are considered legitimate sources of funds for the recapitalization of their banks is that uninsured depositors start taking their money out of their banks, particularly in the other eurozone nations where the banks aren't yet out of trouble.

Bank runs are, generally, considered bad news. So it's somewhat unsurprising that shortly after Dijsselbloem's interview hit the press, he released a terse statement walking it back. You could smell the burning rubber from the speed of the u-turn; it reads, in full:

Cyprus is a specific case with exceptional challenges which required the bail-in measures we have agreed upon yesterday.

Macro-economic adjustment programmes are tailor-made to the situation of the country concerned and no models or templates are used.

It's hard to know quite what Dijsselbloem was thinking – although Paweł Morski presents an entertaining scenario of his own. But it becomes a bit clearer when you look at his background.

Dijsselbloem is the Netherlands' finance minister, a position he has only been in since 2012. His extraordinary position of power in the eurogroup comes from the standard rotating presidency, rather than any particular competency, and, although his electoral career goes back to 2000, his only other policy jobs have been the leader of a parliamentary inquiry on education reform in 2007 and a post at the agriculture ministry from 1996 to 2000.

The eurozone seems to alternate between the under-elected and the under-qualified, and it's not getting any better.

Jeroen Dijsselbloem, with Christine Lagarde and Olli Rehn. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Exclusive: Labour MEPs call for Jeremy Corbyn to resign as leader

Letter demands Corbyn's departure and attacks his office for "promoting" the work of the Leave campaign. 

Labour's MEPs have called for Jeremy Corbyn to resign in the latest challenge to his leadership. In a letter sent to Corbyn and leaked to the New Statesman, Glenis Willmott, the chair of the European Parliamentary Labour Party (EPLP), wrote: "We find it hard to see how any Labour leader can continue in that role if they do not have the support of their MPs." Corbyn yesterday lost a no confidence vote among the Parliamentary Labour Party by 176 to 40. The letter also attacked the leader's office for an "official Labour briefing document" which "promoted the work of Kate Hoey and Gisela Stuart for the Leave campaign."

The demand for Corbyn's resignation is described by sources as the "majority position" of Labour's 20 MEPs. Their stance could prove crucial if the leader is not automatically included in any new contest (a matter of legal dispute) and is required to seek 50 nominations from MP/MEPs (20 per cent of the total). 

The letter reads: 

"The European Parliamentary Labour Party met today for its first meeting since the referendum and concluded that we should send you this letter today.

"The EPLP has always striven to have a loyal and constructive relationship with our party leader, and we have worked hard to cooperate with you over recent months. However, we have very serious concerns in the light of Labour's defeat in the referendum campaign.

"Responsiblity for the UK leaving the EU lies with David Cameron. That being said, we were simply astounded that on Friday morning, as news of the result sank in, an official Labour briefing document promoted the work of Kate Hoey and Gisela Stuart for the Leave campaign.

"Labour's loyal and dedicated teams of activists had just spent weeks on the doorstep and on street-stalls making the case to remain in the EU and countering leave campaign arguments. Yet you and your office authorised a briefing that put the whole Labour campaign on a par with two Labour politicians who had been appearing for weeks alongside right-wing politicians, such as Nigel Farage and Boris Johnson.

"Separate from the referendum issue, it has become clear in recent days that you do not have the confidence of the Parliamentary Labour Party. We find it hard to see how many Labour leader can continue in that role if they do not have the support of their MPs.

"So it it with a heavy heart that we urge you, for the sake of the Labour Party and for the people in our country who need a Labour government, to reconsider your position as Labour leader."

Yours sincerely,

Glenis Wilmott MEP

On behalf of the European Parliamentary Labour Party 

George Eaton is political editor of the New Statesman.