Latest news from Cyprus is banks will be closed all this week and reopen next Tuesday (3-26-13) at the earliest.
After the parliament voted down the plan to take 9.9% of all large deposits and 6.75% of smaller deposits, the government is working on an alternate plan.
Current ideas appear to include some combination of:
- getting Russia to contribute to the bailout
- a smaller ‘tax’ on mid-size depositors, taking more of large depositors wealth, and letting small depositors keep their money
- raiding private pensions
- selling off a newly discovered gas field off the coast
Scary thing is the banks will have been closed for 10 calendar days, which was without notice and which also constricts the economy, as the government ponders how much private wealth to take in order to salvage two banks.
The European Central Bank and International Monetary Fund appear to be holding firm that Cyprus has to come up with €5.8B to match the €10B to be provided by the northern Europeans. Looks like the ECB and IMF want a levy on all depositors to be part of the package.
Two of the better articles this morning for background:
- The Guardian – Cyprus to keep banks shut into next week as it seeks to avert disaster
- The Wall Street Journal – ECB Threatens to Cut Off Cypriot Banks