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Posted on: March 22nd, 2013 by AlYunaniya Staff No Comments

Cyprus in a countdown to bankruptcy or solution

Europe and people

photo: EU

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The European Central Bank said it might cut Cypriot banks off from emergency funds after March 25, if an aid programme from the euro area and International Monetary Fund “that would ensure the solvency of the concerned banks” is in place.

Political leaders in Cyprus have agreed that the country should form an investment fund to raise the capital needed to agree a bailout with the Eurozone and the IMF and avert a collapse of its banking system, Kathimerini writes.

Cypriot President Nicos Anastasiades held a cabinet meeting ahead of parliament’s plenary session originally scheduled to start at 7 pm yesterday; MPs postponed crucial debate on three bills and vote in parliament until 10 am today. According to enet.gr, the first bill concerns the movement of capital, the second concerns Laiki Bank and the third is about the Solidarity Fund.

Anastasiades chaired meetings throughout Wednesday with party leaders, ministers and officials from the troika of EU, ECB and International Monetary Fund lenders. The government said a “Plan B” was in the works.

Cypriot officials told Reuters a ‘Plan B’ was in the works that could include: an option to nationalize pension funds of semi-government corporations, which hold between EUR 2 billion and 3 billion; issuing an emergency bond linked to future natural gas revenues; and possibly reviving the levy on bank deposits, though at a lower level than originally planned and maybe excluding savers with less than EUR 100,000.

“We will find a solution,” said conservative DISY party Averof Neofytou.

“We have no other choice. We are making a united effort to avoid our country’s bankruptcy and I think we will succeed.”

Meanwhile in Greece, after participating in an emergency teleconference of the Eurogroup yesterday night, Finance Minister Yannis Stournaras said that “there is no risk for deposits of Cyprus banks in Greece.”

Earlier, Stournaras had a meeting with the heads of the Bank of Greece and the Hellenic Financial Stability Fund (HFSF) to assess the situation in Cyprus.

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