THE Cypriot parliament has adopted a series of dramatic measures aimed at moving the country away from the financial abyss.
MPs voted to adopt a national solidarity fund in order to lessen the extent of a raid on bank deposits sought by the EU in return for a €10bn bailout, regarded as crucial to rescuing the country from bankruptcy.
The fund will see state assets pooled to facilitate an emergency bond issue. More controversially, parliamentarians also adopted a law to control the movement of capital.
This measure, unprecedented within the EU, is aimed at preventing a run on deposits from the country's banks when they re-open on Tuesday.
However, a levy on bank deposits remains on the table, with indications that a revised bill that would see a 1pc levy on bank accounts will be debated today.
A previous bailout plan, which aimed to raise €5.8bn by introducing a 6.75pc levy on accounts holding between €20,000 and €100,000 and a 9.9pc levy on deposits above €100,000, was rejected by MPs following a public outcry.
Under the new capital movement laws, account holders will face tough restrictions on the amounts they can withdraw and will not be able to prematurely withdraw funds in fixed-term deposit accounts.
Up to €30bn of the country's bank deposits are thought to belong to foreigners, with the bulk of those being Russian.
The law also includes a clause which allows the finance ministry to take any other measures it sees fit to maintain public order and safety.
MPs also approved legislation allowing for lenders to be split into "good banks" and "bad banks" in a bid to rid them of toxic assets.
This new law is likely to be applied first to the country's second biggest lender, Cyprus Popular Bank in a bid to stop small depositors losing out.
As MPs debated and voted until midnight, hundreds of protesters gathered outside the parliament in Nicosia. Riot police held a firm line as the crowd repeatedly chanted: "Troika go home!"
President Nicos Anastasiades and government officials are expected to meet European officials in Brussels over the weekend to seek approval for their revised plan.
The Cypriots had been given until Monday to come up with new proposals after the European Central Bank (ECB) said it would no longer provide emergency funding to banks on the island.
Taoiseach Enda Kenny, continuing his tour of the US, said the discussions in the parliament were a "matter for the Cypriot government". "The revised case will have to be assessed by the troika and accepted by the euro group," he said.
"I think it's important this matter be concluded as quickly as possible, in the interests of stability, in the interests of clarity about where we are in the eurozone.
"In that sense, I do hope it can be concluded over this weekend and that Cyprus can have an accommodation made available to it that is suitable and appropriate to its needs."
Speaking at an EU foreign ministers' conference in Dublin Castle yesterday, Tanaiste Eamon Gilmore said: "It is important that the rest of Europe stands in solidarity with Cyprus.
"The whole approach that we have taken to the financial and banking crisis in Europe has been one of countries staying together, working together and helping each other out of the difficulties that we're in."
The restructuring of Cyprus Popular Bank and the sale of the toxic-laden Greek branches of Cypriot banks is expected to cut the amount the country needs to raise to about €3bn instead of €5.8bn.