The Spectacle Blog

The Clock is Ticking for Cyprus

By on 3.22.13 | 3:21PM

After the Cypriot Parliament struck down the EU-proposal to levy a tax on Cypriot bank depositors as part of a bank bailout deal, Cyprus' finance minister moved to plan B: ask Russia for help.

Russian investors have sunk significant amounts of money into Cypriot banks due to lax money-laundering laws, and it would seem that they might come to the rescue. Moscow refused, putting the Brussels-endorsed bank levy,"back on the table."

The EU has given Cyprus until Monday to act, at which point it will stop funds flowing to Cyprus' banks. As Reuters reports, "the loss of the European Central Bank lifeline would effectively cause the banking system to collapse," forcing Cyprus out of the euro.

Other ideas being debated by Cyprus' leaders to come up with $5.8 billion euros by Monday include nationalizing pension funds, pooling state assets, and splitting Cyprus Popular Bank into good and bad assets. Germany prefers the depositor tax and the splitting of bank assests. As of now, Cyprus' President Nicos Anastasiades seems to agree and is indicating that a tax levied only on depositors with more than €100,000 is a likely course.

A deal is promised in the next few hours. In the meantime, Cypriots are protesting outside of the Parliament.

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