Cyprus races to agree details of 'plan B'
Banks could lose emergency funding within 72 hours, prompting exit from euro
Cyprus has just 72 hours left to come up with a plan to raise €5.8bn before the European Central Bank pulls emergency funding from its ailing banks, plunging the country into economic turmoil and towards an exit from the single currency.
Politicians are frantically trying to scrape together a package to raise the money and get it approved by parliament. But they are playing a delicate balancing act, anxious to please the “troika” of the EU, ECB and International Monetary Fund (IMF), while not alienating their biggest investors in Russia.
Tonight, the government was mulling restructuring the ailing Cyprus Popular Bank - widely known as Laiki - prompting it to impose a €260 daily withdrawal limit and sending customers rushing to cash machines before they ran dry. Hundreds of the bank's employees protested outside parliament, worried that the restructuring might cost them their jobs.
“What am I to do now? I have three kids and many, many loans,” one bank employee, who gave her name as Evi, told The Independent.
Splitting Laiki in two and creating a “bad bank” to deal with unpaid debt was one of a number of proposals being discussed as parliament met tonight, with MPs also debating imposing capital controls to stop money flooding out of Cyprus when the banks reopen on Tuesday.
This morning the ECB said it would continue emergency funding for the worst-hit banks until Monday. Further assistance “could only be considered if an EU/IMF programme is in place that would ensure the solvency of the concerned banks”.
The troika has offered €10bn to prop up the Cypriot economy after it was hit hard by the financial crisis in Greece, but this depends on Cyprus contributing another €5.8bn - funds EU officials are keen to see come from a tax on those with savings of more than €100,000.
Other elements of Nicosia's “Plan B” under discussion were a nationalisation of pensions, a possible contribution from Russia, and what Cypriot politicians are calling a “solidarity fund”, which investors, business people and others will be invited to contribute to. If it is not enough, Cyprus is set to become the first nation ousted from the eurozone.
“If the financial sector collapses, then they simply have to face a very significant devaluation and faced with that situation, they would have no other way but to start having their own currency,” a senior EU official told Reuters news agency.
Eurozone leaders are desperate to prevent the chaos in Cyprus spilling into other nations in the bloc. Jeroen Dijsselbloem, the head of the eurogroup of finance ministers, said that the crisis in Cyprus presented a “systemic” risk. After a conference call with fellow ministers last night, he urged Cyprus to put a new proposal on the table “as rapidly as possible”, after a plan devised in Brussels last weekend was struck down by parliament.
The Cypriot Central Bank governor insisted they would have a programme in place by Monday, and a parliament vote on the new proposals is expected today.
“The Cyprus economy is on the brink and in a fragile state. The next move may prove its salvation or destruction,” the Bank of Cyprus - the nation's largest lender - said in a statement. “It is imperative we immediately proceed with the drawing up of an agreement with the eurogroup.”
Tonight Cypriot Finance Minister Michael Sarris was still involved in talks in Moscow in an attempt to raise funds towards the bailout deal. The ratings agency Standard & Poor's, meanwhile, downgraded the nation's credit rating.
Geoffrey Macnab reviews American Hustle, also starring Christian Bale and Bradley Cooper
newsFormer soldier taped 33 of the animals to the floor and then stamped on them one by one
Michelle Nijhuis' daughter insists (s)he is, and she learnt a valuable lesson on gender in books
news Opponents claim it would stop performers such as Beyonce and Madonna appearing on TV
It takes a platoon of chefs, litres of brandy and rum, and almost 100kg of dried fruit
food + drink
Exclusive: Young people ‘want UK to stay in Europe’: Four in 10 adults aged 18 to 24 are ‘firmly in favour’ of membership, poll shows
Tom Daley ‘is gay because his father died’ says UK evangelist
Iain Duncan Smith leaves Commons food banks debate early
Kiss and yell: Italian protester charged with sexual assault after kissing riot police officer
PM denies two child limit for benefits is part of Tory welfare policy
Anachronistic and iniquitous, grammar schools are a blot on the British education system
- 1 America's 'virgin births'? One in 200 mothers 'became pregnant without having sex'
- 2 Sun will 'flip upside down' within weeks, says Nasa
- 3 Christmas comes early: Justin Bieber is 'retiring from music'
- 4 Iain Duncan Smith leaves Commons food banks debate early
- 5 Children evacuated from swimming pool after prosthetic leg mistaken for paedophile
- < Previous
- Next >
£45000 - £50000 per annum + Benefits: Harrington Starr: QA .NET Agile UNIX LIN...
£35000 - £40000 per annum + Benefits: Harrington Starr: C# ASP.NET SQL Develop...
Negotiable: Harrington Starr: C# .NET SQL Developer (Software Developer, Softw...
£500 - £650 per day: Harrington Starr: Excellent opportunity for Murex Subject...