C'était la ligne rouge qu'il a dû franchir sous chantage à la banqueroute.
From GLOBAL ECONOMY 3:15pmCypriot authorities in revised deal talks©AFPPresident moves to ease terms of levy for smaller deposit holders
In a television address Mr Anastasiades appealed to Cypriots to accept the levy as the “least painful solution”.
“Cyprus is in a state of extreme emergency,” he said. “These are the most tragic events we have faced since 1974”, when the Turkish military intervention following a Greek-inspired coup split the island and triggered an economic collapse.
He asked political parties to back the levy in Monday’s vote “and decide in favour of our citiziens and our national interests.”
“This solution is not what we wanted....but it leaves the running of the economy in our hands,” he said. “And it opens the road to recovery and prosperity.”
He said depositors would be offered bank shares covering the full amount of their losses, while those who left their savings in banks for another two years would be rewarded with bonds backed by future income from exploiting Cyprus’s natural gas deposits.
European Union officials, including a European Central Bank delegation sent to the island on Saturday, were pushing political leaders hard to accept the deal, warning that without it ECB funding keeping the country’s second-largest bank alive would stop and the financial sector could collapse.
“The ECB officials were very blunt,” said one Cypriot official familiar with the discussions. “There are serious fears of contagion regarding Italy and Spain
if this legislation doesn’t go through.”
Eurozone officials have insisted the Cypriot situation is unique and deposit haircuts would not be used elsewhere.
Officials involved in last night’s talks said the changes in the levy’s rates were in flux, but they could see the higher rate increase to as much as 12.5 per cent while the smaller deposits could be about 3.5 per cent.
Olli Rehn, the European Commissioner in charge of economic affairs, told the Financial Times that bailout lenders would not object to a shifting of the burden. “If the Cypriot political leaders decide on a more progressive scale for the one-off levy for the sake of social fairness, and if this has the same financial impact, the commission is ready to recommend that the eurogroup endorse such a decision.”
According to senior officials involved in the talks, the German-led group of negotiators who insisted on the bank levy were agnostic as to where the axe fell. They said Mr Anastasiades, with the backing of the commission, had resisted a rate higher than 10 per cent out of fear it would destabilise the financial sector even more.
One senior eurozone official said the ECB and other EU negotiators at one point suggested putting all the burden on larger depositors.
“We had proposed a levy with a rate of zero below €100,000, and a higher one afterwards,” said the official. “The Cypriot president did not want to agree to a levy higher than 10 per cent, and if you do the numbers you get the 6.75 and 9.9 [per cent].”
Cypriot officials insisted no levy on smaller depositors was impossible. One senior Cypriot official involved in the talks said that because about 35 per cent of all deposits are below the threshold, exempting them would mean a rate so high for the rest that it would no longer be viewed as a tax.
“If this is successful then it will be used in the future,” said the dejected official, predicting Spanish and Italian banks could face similar levies. “If this is not successful then who cares about Cyprus.”
Archbishop Chrysostomos, the island’s influential spiritual leader, called for Cyprus leave deposits intact, leave the eurozone and readopt its former currency, the Cyprus pound.
Additional reporting by Andreas Hadjipapas in Nicosia Parmi les commentaires :
[*]Musso | March 17 8:28pm | Permalink
* "Eurozone officials have insisted the Cypriot situation is unique and deposit haircuts would not be used elsewhere"??? What they have produced, in fact, is a bank run.
* Their words sound so stupid, that I wonder if it is just a way for Brussels, to accelerate with the banking union. Otherwise, those Eurozone officials are simply mad, and ridiculous.
PS.: One decade or the other, German banks will collapse. Keep in mind that little number: 6.75 per cent levy on all deposits under €100,000 ...
[*]Report FrankP | March 17 8:25pm | Permalink
why all the noise,it is a debt for equity swap,a very normal and acceptable strategy in cases where entities are over borrowed and under capitalized.
The end result is that depositors become co share holders
Look at the roots of the situation : which country was leading this decision ? Germany ! So far, majority of working class in Germany is just unhappy and lives below level of rest of Europe. Germany is leading with largest gap between rich and working class compared to rest of the Europe. The biggest evil now is to remain in Eurozone. Democracy is just a word, as all those demonstrations of majorities against stupid decisions are neglected. What working class can do ?
- ReportBill from Ohio | March 17 7:54pm | Permalink
Watch the Cypriot officials go under the bus.
- Reportknys2011 | March 17 7:49pm | Permalink
So now we know, deposit guarantee insurance in the Euro area is not underwritten by the ECB and it is a fiction.
And German Euros are exchangeable for Cypriot Euros, but the Euro is unstable anyway - I wonder where the cash is going to flow to?
- ReportAlfred Nassim | March 17 7:48pm | Permalink
"Lieber ein Ende mit Schmerzen als Schmerzen ohne Ende"
This is the beginning of the end, not the end of the beginning.
This whole thing about Russian black money is a smokescreen. They will be coming after your money in Frankfurt before too long.
First they came for the money in Cyprus, but I did not speak out -
Because I was not a Cypriot ...
I am sure you know the rest of it.
- ReportDmitriy | March 17 7:48pm | Permalink
Reflecting what's hapenning in the EU : it is legalized crime to deprive population its savings. I am sure, most of the super rich were well informed and sent their funds out of Cyprus. President Putin said a year ago : those moving money out of Russia, will soon start looking for ways to bring them back. Cyprus example is just only beginning. Move money back to Russia, it is right time.