Sunday, March 24, 2013

Cyprus Heads to Brussels Today in Hopes to Secure 11th Hour Bailout

Republic of Cyprus President Nicos Anastasiades

Cyprus will leave the Eurozone and enter disorganized bankruptcy within 24 hours if its leaders fail to secure a bailout for the beleaguered Mediterranean island nation. Anastasaides met with Troika officials in Cyprus yesterday and then with party leaders in talks that went into the early Sunday morning to hammer out the remaining issue of a bank levy or “haircut.”

 As a condition to receiving EU financial assistance, Cyprus must raise 5.8 billion euros and a levy is its only option for doing.  The levy is expected to be 20-25% on Bank of Cyprus accounts over 100,000 euros and possibly  a 4-5% levy on accounts in all other banks in Cyprus over 100,000 euros. It is not clear if the tax will be applied to pension funds as well.

"It is essential that an agreement is reached by the eurogroup on Sunday night," stated Olli Rehn,  EU economy and euro commissioner, adding "Unfortunately, the events of recent days have led to a situation where there are no longer any optimal solutions available. There are only hard choices left."  

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