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Cyprus clock ticking…

Hundreds of Cypriots started to gather outside the Parliament again on Friday morning. The majority of them is reportedly employees of Cyprus Popular Bank worrying about their work places as the bank may go bankrupt.

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The parliament debate on banking and finance bills submitted by the government has been postponed as the Troika has a meeting with president Nicos Anastasiades. Media report that the debate and the voting -originally scheduled to start at 10 a.m. – may take place in the afternoon.

Last night, the Cypriot government worked out nine bills, part of the Cyprus Plan B to bring up the 5.8 billion euro demanded by the Eurogroup for the needed bailout. The efforts to secure a loan from Russia seem to have failed.

A key component of “Plan B” is the establishment of a state “investment solidarity fund” which would issue bonds on state assets to raise the 5.8bn euros required.

Other elements could include restructuring other Cypriot banks, use of pension fund, and accepting an offer of help from Cyprus’ wealthy Orthodox Church.

A revised levy on deposits also remains a possibility.

“The Government has achieved consensus on the setting up of an Investment Solidarity Fund in a bid to raise the required €5.8 billion that would unlock the EU/IMF’s €10 billion financial assistance package for Cyprus.

The creation of the Fund comes in the wake of parliament’s rejection of a controversial tax levy on banking deposits agreed by the Cypriot government and Eurogroup last Saturday.” (Cyprus Mail)

Yesterday the Eurogroup ministers discussed via a teleconference the developments in Cyprus and reaffirmed their readiness to discuss with the Cypriot authorities a draft new proposal to be presented “as rapidly as possible”. In fact, the Eurozone finance ministers urged Cyprus  to say how it could reach a deal with international lenders that would save it from bankruptcy.

German Chancellor Merkel says Germany wants Cyprus to stay in Eurozone but it must realise that the current business model is dead.

The European Central Bank gave Cyprus until Monday to raise billions of euros to clinch an international bailout or face losing emergency funds for its banks and inevitable collapse.

Solution without the Troika?

President of Cypriot Parliament Yiannakis Omirou told Greek media this morning, that “we will try a solution outside the Troika and the mechanism, no matter how painful this would be”. Omirou did not elaborate but he accused Germany of wanting to “strangulate Cyprus and destroy its banking sector.”

The Russian card

Wealthy Russians are believed to have billions of euros in Cyrpiot banks and hold about a third of all Cypriot deposits. No wonder they are fury about a deposit levy of 9.9%. the money is believed to be part of money laundering.

Cypriot and Greek media reported that Putin asked the Cypriot government to hand out lists with the names of the Russian depositors in an effort to get the money back to Russia. cypriots refused to satisfy the Russian request.

The two-day visit of finance minister Michalis Sarris in Moscow ended in failure. apparently, he offered Russians incentives from the Cypriot gas.

Russian Finance Minister Anton Siluano told reporters “Russian investors were not interested in Cypriot gas” and that the talks had ended without result.

Banks closed – Bank run fears

All Cypriot banks have been shut until next Tuesday to prevent mass withdrawals.

Cyprus Popular Bank imposed a cap of 260-euro per day and per customer in order to come up with the high withdrawal demand on its ATMs.

Many reports from the island confirm that credit cards are not accepted by retailers. All banks on Cyprus closed last Saturday and are expected to open again upcoming Tuesday, March 26th 2013. There are fears a bank run may occur  is expected, even though the government hopes to impose a capital transfer restriction until then.

Economists estimate that 7 billion euro would leave the banks.

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5 comments

  1. One could be forgiven for thinking the situation in Cyprus would be the perfect reason for cleaning up a truely rotten banking system. No such luck..
    Instead, the situation is being turned into a testing ground for new “regulation” which will not regulate the rotten banking system, but instead regulate how you use the existing system. Here is the summary of new “regulations” which restrict what YOU can do, not what the BANK can do:

    ** Restrictions in daily withdrawals
    ** Ban on premature termination of time savings deposits
    ** Compulsory renewal of all time savings deposits upon maturity
    ** Conversion of current accounts to time deposits
    ** Ban or restrictions on non cash transactions
    ** Restrictions on use of debit, credit or prepaid debit cards
    ** Ban or restriction on cashing in checks
    ** Restrictions on domestic interbank transfers or transfers within the same bank
    ** Restrictions on the interactions/transactions of the public with credit institutions
    ** Restrictions on movements of capital, payments, transfers
    ** Any other measure which the Finance Minister or the Governor of Cyprus Central Bank see necessary for reasons of public order and safety

    the last one is really interesting. That cannot be interpreted in any other way than :”And whatever else you are having yourself, do what you like”.

    • keeptalkinggreece

      let’s wait and see what the Cypriots will vote and approve at the end of the day (literally)

  2. Day after day I am reminded that regardless who you elect to run your country, the banksters really are the masters. They are more powerful than ANYONE in ANY government. Presidents, parliaments, all are powerless and must fall to their knees against the masters.

    The EU was just a very smart move to herd all the sheep into a single cage.