| BBC News | - |
Parliament
in Cyprus has approved a "national solidarity fund" to ease the banking
crisis, which has hit confidence across the eurozone.
22 March 2013
Last updated at 17:39 ET
These are the first of a series of laws intended to raise the 5.8bn euros (£4.9bn; $7.5bn) Cyprus needs to qualify for a 10bn-euro bailout.
MPs are still to decide whether to impose a levy on large bank deposits.
Before the series of much-delayed votes in an emergency session of parliament, the European Union, Germany and leading bankers all urged MPs to speedily pass the reforms.
The European Central Bank has given Cyprus until Monday to find a solution, or it says it will stop transferring money to its undercapitalised banks.
The EU has postponed next week's summit to discuss free trade with Japan, so European leaders can concentrate on trying to solve the Cyprus crisis.
Banks on the island have been closed since Monday and many businesses are only taking payment in cash.
There were protests outside parliament on Friday.
'Playing with fire' Before the parliamentary session began, government spokesman Christos Stylianides said the authorities were engaged in "hard negotiations with the troika", referring to the EU, the European Central Bank and the International Monetary Fund, the AFP news agency reports.
German Chancellor Angela Merkel warned Cyprus not to "exhaust the patience of its eurozone partners", reports say.
One suggestion was to use pension funds to rescue Cyprus' banking system - it is not clear whether this is part of the "solidarity fund" but the idea was condemned by Ms Merkel.
One of her allies in parliament, Volker Kauder, said it was "playing with fire".
He said it could not happen because it would hurt what he described as "the pensioners, the small people".
Correspondents say Germany is saying that Cyprus cannot expect any more help from Berlin, or Brussels, than what has already been offered.
'Door open' Some help has been forthcoming, with the announcement that Greece's Piraeus Bank would take over the local units of Cypriot banks. This would safeguard all the deposits of Greek citizens in Cypriot banks.
Mr Stylianides urged the country's MPs to "take the big decisions" to prevent a financial meltdown.
"We must all assume our share of the responsibility," he said in a televised statement.
Leading Cypriot bankers have urged parliament to accept a levy
on bank deposits, as originally proposed under the bailout, but with
smaller depositors exempted.
The plan overwhelmingly rejected on Tuesday said small savers would pay a 6.75% levy, while larger investors would pay 9.9%.
Bank of Cyprus chairman Andreas Artemis said: "It should be understood by everyone... especially from the 56 members of parliament... there should not be any further delay in the adoption of the eurogroup proposal to impose a levy on deposits more than 100,000 [euros] to save our banking system.
If ordinary savers are exempt, then larger investors, many of them Russian, would have to pay an even higher rate, if a levy does remain part of the scheme.
The government fears this would prompt foreign investors to withdraw their money, destroying one of the island's biggest industries.
State TV said a 15% levy on bank deposits of more than 100,000 euros was being discussed, AFP says.
Businesses in Cyprus have been insisting on payment in cash, rejecting card and cheque transactions.
"We have pressure from our suppliers who want only cash," Demos Strouthos, manager of a restaurant in central Nicosia, told AFP news agency.
Our correspondent says he has never seen this much pressure being applied to a member state by the rest of the eurozone community in recent years.
Eurozone partners are saying Cyprus has got to change its banking system, over-reliant on foreign depositors, and the money it needs has to come out of that system, one way or another, he adds.
Earlier, talks in Moscow on possible new financial aid from Russia, a key investor in Cyprus, failed.
Russia's Finance Minister Anton Siluanov, speaking after talks with his Mr Sarris, said Russian investors were not interested in Cyprus' offshore gas reserves.
But Prime Minister Dmitry Medvedev later said Moscow had not "closed the door" on possible future assistance, however, Cypriot leaders must first reach agreement with their fellow EU members.
end quote from:
Cyprus MPs back 'solidarity fund' to ease bank crisis
Cypriot reaction: "No-one knows what is going on"
Parliament
in Cyprus has approved a "national solidarity fund" to ease the banking
crisis, which has hit confidence across the eurozone.
MPs also imposed capital controls to prevent a run on the island's troubled banks.These are the first of a series of laws intended to raise the 5.8bn euros (£4.9bn; $7.5bn) Cyprus needs to qualify for a 10bn-euro bailout.
MPs are still to decide whether to impose a levy on large bank deposits.
Continue reading the main story
The eurozone is really turning the screw on Cyprus, and it's being led by Germany.
The message is crystal clear - your economic model has to change. They will no longer accept the idea of a national economy within the eurozone that is dependent on its reputation as an offshore tax haven.
There is huge irritation with the way the Cypriots have handled things, and that has led to the imposition of deadlines which mean big decisions need to be taken very quickly.
The cost of cleaning up the Cypriot banking system must be borne by investors in the Cypriot banking system - like it or lump it.
Analysis
The message is crystal clear - your economic model has to change. They will no longer accept the idea of a national economy within the eurozone that is dependent on its reputation as an offshore tax haven.
There is huge irritation with the way the Cypriots have handled things, and that has led to the imposition of deadlines which mean big decisions need to be taken very quickly.
The cost of cleaning up the Cypriot banking system must be borne by investors in the Cypriot banking system - like it or lump it.
The fund would allow the pooling of state assets for an emergency bond issue, reports the Reuters news agency.
Parliament on Tuesday rejected a levy on all deposits to raise the money.Before the series of much-delayed votes in an emergency session of parliament, the European Union, Germany and leading bankers all urged MPs to speedily pass the reforms.
The European Central Bank has given Cyprus until Monday to find a solution, or it says it will stop transferring money to its undercapitalised banks.
The EU has postponed next week's summit to discuss free trade with Japan, so European leaders can concentrate on trying to solve the Cyprus crisis.
Banks on the island have been closed since Monday and many businesses are only taking payment in cash.
There were protests outside parliament on Friday.
'Playing with fire' Before the parliamentary session began, government spokesman Christos Stylianides said the authorities were engaged in "hard negotiations with the troika", referring to the EU, the European Central Bank and the International Monetary Fund, the AFP news agency reports.
German Chancellor Angela Merkel warned Cyprus not to "exhaust the patience of its eurozone partners", reports say.
Continue reading the main story
“Start Quote
This crisis has revealed yet again the faultline at the heart of the euro”
Cypriot Finance Minister Michael
Sarris has returned from Moscow, where he failed to garner Russian
support for alternative funding methods.
He said a levy "of some sorts" remains "on the table" despite
widespread fury among both ordinary savers and large-scale foreign
investors, many of them Russian.One suggestion was to use pension funds to rescue Cyprus' banking system - it is not clear whether this is part of the "solidarity fund" but the idea was condemned by Ms Merkel.
One of her allies in parliament, Volker Kauder, said it was "playing with fire".
He said it could not happen because it would hurt what he described as "the pensioners, the small people".
Correspondents say Germany is saying that Cyprus cannot expect any more help from Berlin, or Brussels, than what has already been offered.
'Door open' Some help has been forthcoming, with the announcement that Greece's Piraeus Bank would take over the local units of Cypriot banks. This would safeguard all the deposits of Greek citizens in Cypriot banks.
Mr Stylianides urged the country's MPs to "take the big decisions" to prevent a financial meltdown.
"We must all assume our share of the responsibility," he said in a televised statement.
The plan overwhelmingly rejected on Tuesday said small savers would pay a 6.75% levy, while larger investors would pay 9.9%.
Bank of Cyprus chairman Andreas Artemis said: "It should be understood by everyone... especially from the 56 members of parliament... there should not be any further delay in the adoption of the eurogroup proposal to impose a levy on deposits more than 100,000 [euros] to save our banking system.
If ordinary savers are exempt, then larger investors, many of them Russian, would have to pay an even higher rate, if a levy does remain part of the scheme.
The government fears this would prompt foreign investors to withdraw their money, destroying one of the island's biggest industries.
State TV said a 15% levy on bank deposits of more than 100,000 euros was being discussed, AFP says.
Businesses in Cyprus have been insisting on payment in cash, rejecting card and cheque transactions.
"We have pressure from our suppliers who want only cash," Demos Strouthos, manager of a restaurant in central Nicosia, told AFP news agency.
Our correspondent says he has never seen this much pressure being applied to a member state by the rest of the eurozone community in recent years.
Eurozone partners are saying Cyprus has got to change its banking system, over-reliant on foreign depositors, and the money it needs has to come out of that system, one way or another, he adds.
Earlier, talks in Moscow on possible new financial aid from Russia, a key investor in Cyprus, failed.
Russia's Finance Minister Anton Siluanov, speaking after talks with his Mr Sarris, said Russian investors were not interested in Cyprus' offshore gas reserves.
But Prime Minister Dmitry Medvedev later said Moscow had not "closed the door" on possible future assistance, however, Cypriot leaders must first reach agreement with their fellow EU members.
end quote from:
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