Cyprus is to receive a €10 billion (£8.7 billion) bail-out from the eurozone to recapitalise its ailing banking system in return for a series of drastic measures which will hit the country’s savers.
The emergency funding will be used to prop up the country’s banks(-ters) which were
hit by the financial restructuring of nearby Greece.
The Cypriot banking system had grown to be eight times the size of the
country’s fledgling economy - which accounts for just 0.2pc of the
eurozone’s gross domestic product.
But in a departure from previous bail-outs, the country’s savers are being
asked to make sacrifices.
The terms of the deal mean that Cyprus’s savers will sacrifice up to 10pc of
their deposits in a move which will raise as much as €6 billion.
The move, which is likely to prove unpopular with the country’s 1m citizens -
and the Russian non-residents who reportedly account for half of deposits in
Cyprus’s banks - will be enacted almost immediately.
Following a bank holiday in the country on Monday, March 18, the levy on bank
deposits will come into force on Tuesday, March 19.
The Cypriot government will take steps to prevent electronic money transfers over the weekend, in order to stop depositors attempting to avoid the curbs.
“As it is a contribution to the financial stability of Cyprus, it seems just to ask for a contribution of all deposit holders," said Jeroen Dijsselbloem, the Dutch finance minister who chaired the meeting at which the bail-out was agreed in Brussels.
"We are not penalising Cyprus... we are dealing with the problems in Cyprus," he continued.
Christine Lagarde, managing director of the International Monetary Fund (IMF), attended the meeting: “I welcome the agreement reached today to address Cyprus’ economic challenges. The IMF has always said that we would support a solution that is sustainable, that is fully financed, and that appropriately allocates the burden sharing.”
On returning to Washington, she said she would ask the IMF’s board to contribute to the bail-out package.
It is thought the IMF’s participation will come from existing funds, and therefore not require additional financing from member countries, such as the UK.
The €10 billion falls short of the €17 billion the Cypriot government estimated it required to stabilise its banking system.
However the eurozone finance ministers are understood to have felt such a level of debt would be too risky, given €17 billion is almost the size of the country’s annual GDP.
In addition to the raid on savers, the Cypriot government has also agreed to increase its corporation tax rate by 2.5 percentage points to 12.5pc in order to raise revenues.
Michael Sarris, the Cypriot finance minister, is due to fly to Moscow to negotiate an extension to an existing €2.5 billion loan from the Russian government.
He hopes to extend the term by five years, to 2021, and reduce the amount of interest payable.
Olli Rehn, European Commissioner for Economic and Monetary Affairs, said that he believed the Russian government is ready to make a contribution.
At the same meeting, eurozone finance ministers agreed to extend the maturity of existing loans to Portugal and Ireland, but the terms of the extensions were not made public.
Following a bank holiday in the country on Monday, March 18, the levy on bank
deposits will come into force on Tuesday, March 19.
The Cypriot government will take steps to prevent electronic money transfers over the weekend, in order to stop depositors attempting to avoid the curbs.
“As it is a contribution to the financial stability of Cyprus, it seems just to ask for a contribution of all deposit holders," said Jeroen Dijsselbloem, the Dutch finance minister who chaired the meeting at which the bail-out was agreed in Brussels.
"We are not penalising Cyprus... we are dealing with the problems in Cyprus," he continued.
Christine Lagarde, managing director of the International Monetary Fund (IMF), attended the meeting: “I welcome the agreement reached today to address Cyprus’ economic challenges. The IMF has always said that we would support a solution that is sustainable, that is fully financed, and that appropriately allocates the burden sharing.”
On returning to Washington, she said she would ask the IMF’s board to contribute to the bail-out package.
It is thought the IMF’s participation will come from existing funds, and therefore not require additional financing from member countries, such as the UK.
The €10 billion falls short of the €17 billion the Cypriot government estimated it required to stabilise its banking system.
However the eurozone finance ministers are understood to have felt such a level of debt would be too risky, given €17 billion is almost the size of the country’s annual GDP.
In addition to the raid on savers, the Cypriot government has also agreed to increase its corporation tax rate by 2.5 percentage points to 12.5pc in order to raise revenues.
Michael Sarris, the Cypriot finance minister, is due to fly to Moscow to negotiate an extension to an existing €2.5 billion loan from the Russian government.
He hopes to extend the term by five years, to 2021, and reduce the amount of interest payable.
Olli Rehn, European Commissioner for Economic and Monetary Affairs, said that he believed the Russian government is ready to make a contribution.
At the same meeting, eurozone finance ministers agreed to extend the maturity of existing loans to Portugal and Ireland, but the terms of the extensions were not made public.
Eurozone finance ministers have agreed to a €10 billion bail-out of the Cypriot banking system Photo: Alamy
Source
U.S. Welcomes NATO’s Absorption of Cyprus
By Stefanos Evripidou
Cyprus: U.S. To Dominate All Europe, Mediterranean Through NATO
The United States welcomes Cyprus’ commitment to strengthen ties with the transatlantic security organisation NATO, US ambassador to Nicosia John Koenig said yesterday.
He also called for a careful planning of the new government’s stated
goal of joining NATO’s anteroom, the Partnership for Peace (PfP)
programme, to ensure a positive effect on EU-NATO relations.
Speaking after an hour-long meeting with President Nicos Anastasiades at the Presidential Palace, the US diplomat said Washington is very interested in developing cooperation between the two countries.
“And as President Anastasiades has made clear repeatedly both during the campaign and since becoming president that he is committed to strengthening the relationship between Cyprus and the United States and anchoring Cyprus more firmly in the transatlantic set of key relationships, this is something that we welcome and look forward to developing closely with him and his administration in the coming years,” Koenig said.
The previous government of Demetris Christofias was vociferously against applying for membership of PfP or developing any relationship with the North American-European security organisation NATO which the former ruling party AKEL blames in a large part for the Greek coup of 1974, and subsequent invasion and occupation of Cyprus’ northern third.
At a separate event to award Cypriot national guardsmen trained by US experts on managing ordnance stockpiles yesterday, Koenig said the US salutes Cyprus’ stated interest in moving closer to the NATO Alliance.
“We believe that things like membership in Partnership for Peace need to be prepared carefully to ensure a productive and positive effect on our relations and on NATO-EU cooperation that we all seek,” he said.
The Cyprus conflict has been a constant obstacle in enhancing NATO-EU relations since the island joined the bloc in 2004, with Turkey refusing to allow Cyprus to sit in on EU-NATO discussions while for its part, Cyprus blocks Turkey’s membership of the European Defence Agency.
Also present at yesterday’s ceremony was Defence Minister Fotis Fotiou who said Cyprus’ participation in PfP would provide Cyprus and the US an opportunity for closer cooperation in many areas.
The minister said developing and strengthening relations with the US was a priority of the new government, adding that, to this end “we will work diligently”.
Regarding Cyprus’ explorations for hydrocarbons in its Exclusive Economic Zone (EEZ), Fotiou said this would have to be done in the best possible manner for the benefit of all Cypriots.
For his part, Koenig said the US has had “a very consistent policy with regard to the development of the offshore resources of Cyprus. We support Cyprus’ right to explore and develop those resources.
“We also at the same time do encourage all parties involved in this issue to do nothing that would increase tensions,” he added.
Source
banzai7
Greek X art response - Musical Intermission:
U.S. Welcomes NATO’s Absorption of Cyprus
By Stefanos Evripidou
Cyprus: U.S. To Dominate All Europe, Mediterranean Through NATO
The United States welcomes Cyprus’ commitment to strengthen ties with the transatlantic security organisation NATO, US ambassador to Nicosia John Koenig said yesterday.
Speaking after an hour-long meeting with President Nicos Anastasiades at the Presidential Palace, the US diplomat said Washington is very interested in developing cooperation between the two countries.
“And as President Anastasiades has made clear repeatedly both during the campaign and since becoming president that he is committed to strengthening the relationship between Cyprus and the United States and anchoring Cyprus more firmly in the transatlantic set of key relationships, this is something that we welcome and look forward to developing closely with him and his administration in the coming years,” Koenig said.
The previous government of Demetris Christofias was vociferously against applying for membership of PfP or developing any relationship with the North American-European security organisation NATO which the former ruling party AKEL blames in a large part for the Greek coup of 1974, and subsequent invasion and occupation of Cyprus’ northern third.
At a separate event to award Cypriot national guardsmen trained by US experts on managing ordnance stockpiles yesterday, Koenig said the US salutes Cyprus’ stated interest in moving closer to the NATO Alliance.
“We believe that things like membership in Partnership for Peace need to be prepared carefully to ensure a productive and positive effect on our relations and on NATO-EU cooperation that we all seek,” he said.
The Cyprus conflict has been a constant obstacle in enhancing NATO-EU relations since the island joined the bloc in 2004, with Turkey refusing to allow Cyprus to sit in on EU-NATO discussions while for its part, Cyprus blocks Turkey’s membership of the European Defence Agency.
Also present at yesterday’s ceremony was Defence Minister Fotis Fotiou who said Cyprus’ participation in PfP would provide Cyprus and the US an opportunity for closer cooperation in many areas.
The minister said developing and strengthening relations with the US was a priority of the new government, adding that, to this end “we will work diligently”.
Regarding Cyprus’ explorations for hydrocarbons in its Exclusive Economic Zone (EEZ), Fotiou said this would have to be done in the best possible manner for the benefit of all Cypriots.
For his part, Koenig said the US has had “a very consistent policy with regard to the development of the offshore resources of Cyprus. We support Cyprus’ right to explore and develop those resources.
“We also at the same time do encourage all parties involved in this issue to do nothing that would increase tensions,” he added.
Source
banzai7
WB7 Independent 'visual combat' - signed fine X art prints for sale
__________________________
Additional:
Stacy Herbert Summary: And so it has arrived. All banks will this
weekend have electronic transfer frozen while a bailout is brought in
and then on Tuesday, 19 March, ten percent of all fiat savings
will be taken from every depositor and transferred to central planners
and banksters. Gold bugs get the last laugh. Ha ha ha paperbugs!
- ****** Government spokesman Christos Stylianides said Cypriot officials had resisted intense pressure to accept a deposit levy of a whopping 40 percent. *******
- ***** IMF & GERMAN FINANCE MINISTER PRESSURED CYPRUS TO TAKE 40% ******
Following a bank holiday in the country on Monday, March 18, the levy on bank deposits will come into force on Tuesday, March 19.
The Cypriot government will take steps to prevent electronic money transfers over the weekend, in order to stop depositors attempting to avoid the curbs.
“As it is a contribution to the financial stability of Cyprus, it seems just to ask for a contribution of all deposit holders,” said Jeroen Dijsselbloem, the Dutch finance minister who chaired the meeting at which the bail-out was agreed in Brussels.
This is the best sentence in the whole piece:
The move, which is likely to prove unpopular with the country’s 1m citizens – and the Russian non-residents who reportedly account for half of deposits in Cyprus’s banks – will be enacted almost immediately.
More:
- Cyprus Depositor Tax: Genius Plan or the End of the Euro?
- Bank Run in Cyprus; Who’s Next?
- Cyprus rescue not applicable to other countries: Spain source
- Cash machines emptied across Cyprus after savers learn 10billion euro bailout agreement includes levy on all bank accounts
- Rage outside presidential palace, minister’s car attacked
- $100 bills in your hand have just been declared to be worth somewhere between 7-10% more than those “deposited” and “stored” in a bank. May I ask the following pertinent and rather timely question: Where are yours?
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