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Saturday 18 November 2017

Cypriot politicians begin debate on hugely-divisive bailout

Protesters raise their open palms showing the word
Protesters raise their open palms showing the word "No" during an anti-bailout rally outside the parliament in Nicosia

PARLIAMENT in Cyprus began debating a deeply divisive levy on bank deposits today to secure an international bailout and avoid default.

The outcome was uncertain, after President Nicos Anastasiades warned the assembly would likely reject the bill as "unjust", threatening to tip the Mediterranean island deeper toward financial chaos.

 

Earlier it emerged there will be no need to impose a levy on assets in other euro zone countries along the lines of that Cyprus plans on bank deposits to limit the size of emergency loans it needs, the chairman of euro zone finance ministers said on Tuesday.

 

Cyprus plans a levy on deposits above €20,000 of 6.75pc and 9.9pc on deposits higher than €100,000, to raise cash for the recapitalisation of its oversized banking sector, hit hard by the Greek sovereign debt restructuring.

 

This raised concerns that a similar measure could be used in other euro zone countries, undermining depositors' confidence in banks. But Dutch Finance Minister Jeroen Dijsselbloem, who chairs meetings of euro zone ministers, said it would not happen in other countries.

 

"It is absolutely out of the question, there is no need for a one-off levy in other countries on assets," Dijsselbloem said in the Dutch parliament.

 

He reiterated that because of the size of the Cypriot banking sector and its recapitalisation needs, it was inevitable that depositors had to be called on to help.

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