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article imageBanking officials — Cyprus can amend terms of bailout

By Paul Iddon     Mar 18, 2013 in Politics
In order to qualify for a bailout of 10 billion euro Cypriot citizens had to pay a sizable levy, one-off tax, from their bank deposits.
However Joerg Asmussen who is a member of the European Central Bank's governing council stated that EU and German banking officials have no problem with Cyprus altering what it sees as objectionable terms to this agreement. He outlined his reasoning when he said, "It's the Cyprus government's adjustment program. If Cyprus' president wants to change something regarding the levy on bank deposits, that's in his hands. He must just make sure that the financing is intact. The important thing is that the financial contribution of 5.8 billion euros remains.
German Finance Minister Wolfgang Schaeuble has said that it is the Cypriot government along with the European Central Bank and the European Commission that concocted the controversial levy terms and accordingly "they must explain this to the Cypriot people."
Russian President Vladimir Putin, whose country's powerful businessmen have substantial business and depository interests in Cyprus, called the levy "unfair, unprofessional and dangerous." The Russian Prime Minister Dmitry Medvedev echoed the President's statement when he said that to him the levy "looks simply like the confiscation of other peoples money." (London Evening Standard, March 18 2013)
At present the banks in Cyprus are closed for a national holiday and will remain closed tomorrow in order to avoid runs that could lead to mass withdrawals -- of which there won't be half enough cash to provide with depositors if mass amounts of them try to withdraw all at once. Similarly the parliament building in the Cypriot capital of Nicosia has been cordoned off to prevent protesters from conglomerating to voice their many grievances with the levy. President Anastasiades is currently holding talks in there with lawmakers and ministers where he is said to be at present discussing lowering the cost imposed on those who have smaller savings. (BBC News, March 18 2013)
Under the present terms of the levy those who make less than 100,000 euros will have to pay 6.75% of their earnings in the form of a one-time taxation. Those with over 100,000 euros however will have to pay 9.9% of their savings in order for Cyprus to qualify for a bailout in order to prevent its financial system from collapsing.
Read the latest up to date news from Cyprus on Digital Journal here.
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