Parliament Meeting to Continue Talks of Last Night; Hash Out New Plan
21st March 2013
With Russia declining further financial assistance (which Troika was expected to decline anyway, stating that solutions must be found within the Eurozone) and Troika’s rejection of “inside funding” by the Cypriot Orthodox Church, Cyprus takes a second look at bank levies in combination with alternative fund sources. The plan that is said to be taking shape now possibly involves the following:
Levy on deposits of over 200,000 euros
This would protect small depositors while skimming larger balances including those held by foreign investors. This is in keeping with the basic banking concept that deposits under 100,000 euros are insured. However, this would further damage Cyprus’ corporate services industry, one of the largest contributors to Cyprus economy, though it may have been irreparably damaged already.
Closure of Cyprus Popular Bank (Laiki Bank)
Presumably deposits would be insured up to 100,000 euros (at least one would hope so) but amounts beyond that would be lost, as would thousands of jobs. The rumor circulating yesterday the Russian energy giant Gazprom had taken over the bank, seems to have been just that, a rumor.
Nationalising the pension funds and provident funds of the state employees
This measure would be expected to raise 2 billion to 3 billion euros.
Marios Mavrides, a government MP and former finance minister has stated that if Cyprus does not come up with the 5.8 billion euros within a few days, it may have to revert to the Cyprus pound, being the first member state to leave the Eurozone. The same was said about Greece while it was in the throes of its bailout.
Many Cypriots and residents feel that exit from the Eurozone and disorderly bankruptcy is preferable to a bank levy in the original form which would have appropriated a percentage of all bank accounts. There are just as many who would have taken the levy in its original form, wrong as it was, and the consequences that would follow, in order to move on and repair the country.
Now we wait.