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Cypriot finance officials revise bailout terms, propose levy limits


 

NICOSIA, Cyprus – Cypriot government officials proposed Tuesday a change to a plan to raid bank deposits that has caused outrage in the country and sent jitters through European financial markets.

Just hours ahead of an expected vote in the country’s 56-member Parliament on the seizure of a percentage of deposits, officials sought to limit the impact on small savers.

A new draft bill discussed in Parliament’s finance committee proposed to spare all deposits below €20,000 (C$26,500) from a charge.

Those between €20,000 and €100,000 (C$132,550) would still have a 6.75 per cent charge imposed, and those above €100,000 would be hit for 9.9 per cent, in line with the original plan put forward at the weekend.

A vote in favour of the bank account confiscation is needed if Cyprus is to get €10 billion (C$13.2 billion) in rescue loans from its euro partners and the International Monetary Fund. The seizure of deposits is meant to raise €5.8 billion, which is part of the country’s rescue.

If the vote fails to get through Parliament, Cyprus faces potential bankruptcy and a possible from the euro, which could reignite concerns in financial markets over the future of the single currency.

In a sign of the scale of disagreement over the deposit charge, the country’s central bank governor recommended that no accounts below €100,000 be touched. That level represents the amount of savings that are supposed to be insured if a bank collapses.

Banks have been shut until Thursday to prevent a bank run.

Finance Minister Michalis Sarris is to fly to Moscow Tuesday afternoon to meet with his Russian counterpart. About a third of all deposits in Cypriot banks are believed to be held by Russians.

Christine Lagarde, managing director of the International Monetary Fund, said in a speech Tuesday in Frankfurt that the IMF was “extremely supportive of the Cypriot authorities’ intentions to introduce more progressive rates in the one-off tax.”


 
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Cypriot finance officials revise bailout terms, propose levy limits

  1. You cant do this to your OWN people, its Stealing.
    The Cyprus Government is at fault. How disgusting to do it over their bank holidays and then put the decision on hold!.
    Whats there next step? I will tell you. They lower the percentage down, so it does not look as bad? That is what is called “what a relief” tactic”.in marketing.

    There needs to be a all out National Strike, the Government will soon change there minds. It has to be stopped now, the Euro is not working, just how the Germans wanted it to fail.

    • Agreed. For all intents and purposes this is confiscation of private property. I do hope the people of Cyprus do the needful in telling their government to find another way.

      Having said that, Cyprus’ best move is possibly exiting the EU and taking the accompanying currency hit.

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