By Kari Huus, Staff writer, NBC News
Lawmakers in Cyprus approved three bills late Friday aimed at securing a bailout for its troubled banks from the European Union and averting a financial meltdown.
The legislation includes one bill that allows the government to divide the wobbling lenders into good and bad banks — a law that would likely to be applied first to Cyprus Popular Bank. The goal is to restructure without hurting small depositors.
A second law puts in place restrictions on financial transactions in times of crisis and a third sets up a “solidarity fund.”
The country is expected to adopt more legislation in an effort to raise the 5.8 billion euros Cyprus needs to get an EU bailout.
They are saying that there will be controlled releases of money to prevent bank runs and a massive restructuring of the banking system.
Just listened to this latest report which states that part of the deal they’ve agreed to is, ‘a so called Solidarity fund, issuing bonds using future gas revenues as collateral.’
Cyprus passes laws for capital controls: reports
Lawmakers in Cyprus passed legislation to impose capital controls on its banks and create a “solidarity fund” to pool state assets, according to media reports late Friday.
Here’s The Last-Ditch Plan Cyprus Is Going To Pitch To The EU This Weekend
The president of Cyprus is on his way to Brussels this morning in a bid to persuade Eurozone finance chiefs to accept a last-minute deal to avoid financial meltdown in the island.
Nicos Anastasiades was due in the Belgian capital on Saturday after a sitting of Cypriot parliament last night approved a series of bills aimed at securing the country a European Union bail-out.
The measures include a bill to restructure ailing Cypriot banks, and restrictions on financial transactions to stop a cash-flight from the country in the wake of last week’s panic. There will also be a revenue-raising tax of less than 1 percent on all bank deposits – a move seen as fairer than the levy of 6.75 per cent originally proposed on deposits between 20-100,000 euros, which was rejected by the Cypriot parliament last Tuesday.
Read more: http://www.businessinsider.com/cyprus-leaders-take-new-plan-to-brussels-2013-3#ixzz2ON8F4Dty
Cyprus Deposit Levy Vote Delayed, Will Go “Down To The Wire” As Up To 70% Deposit Tax Contemplated For Some
While GETCO’s algos were poised to set off a buying tsunami yesterday the millisecond a flashing red headline hit Bloomberg with even the hint or suggestion that Cyprus is fixed, we said to sit back and relax because Cyprus “will get no resolution today, or tomorrow, and may at best be resolved on Sunday night following yet another coordinated global bailout, (although our money is on a last, last minute resolution some time on Monday when Cyprus is closed but the European markets are widely open).”
As it turns out, we were right, following reports by major newswires that the vote on the deposit levy will only take place (if at all) on Sunday night, after the Eurozone finance ministers’ meeting on Sunday.
As it also turns out, and as noted previously, the votes taken yesterday were the easy ones – obviously Cyprus will now need capital controls in perpetuity to slow down the terminal unwind of its banking system which is now, for all intents and purposes, over and will only exist, if at all, entirely though ECB liquidity injections, but the difficult decision – to complete U-Turn on the Tuesday vote just saying no to deposit tax levy – has been delayed.
The reason for the delay? Deciding how to best bring the news to Russian, and other wealthy depositors, that not only will they not have access to their funds for a long, long time, the ultimate haircut on what they thought was safe, easily accessible cash as recently as a week ago, may be a stunning 70%!
Clock is ticking on Cyprus
Cyprus endgame: What happens if its banks collapse?
If Cyprus abandon the Euro:
“Extending the emergency liquidity assistance without a clear deal could lead to a significant transfer of risk toward the ECB, and questions over its credibility,” noted the Open Europe think tank.
“This would be a particularly poisonous debate in Germany, something which neither the ECB nor the German government would want.”
“The longer the restrictions on withdrawing and transferring assets continue, the more it increases the chances of drastic capital flight once they are lifted,” wrote IHS Global Insight analyst Sean Harrison in a report.
Is this the beginning of the break up of the EUROPEAN UNION??
Cyprus – get ready for the crisis!
No workable deal is yet on the table. The Cypriot parliament will probably not vote for deposit levies. This means that, at the moment, the most likely outcome is that the euro will not survive in its current form. In order to prevent total collapse, Cyprus will have to exit the euro in order to get its own currency, print money, and shore up the financial system. We will see some break-up of the euro.
European policymakers are gambling that they have the tools to stop contagion to other countries. Cyprus is only about 0.2% of euro area GDP, and with the ESM and the ECB prepared to step in, they may be able to contain market jitters.
But even if financial markets took it in their stride in the short term, the implications of a Cypriot exit would be far-reaching. The euro would definitively not be irrevocable. The deposit guarantee of up to EUR100,000 would probably be violated. And European leaders would have shown that all citizens are not equal. When another country gets into trouble – probably Greece again, but maybe Italy – the option of leaving the single currency will be on the table from the start.
This is not to put all the blame on Europeans – Cyprus is hardly a paragon of virtue. But European policymakers are about to break their promises in far-reaching and potentially catastrophic ways. Even if a Cypriot exit is ‘well handled’, it will only add fuel to a future crisis. Be afraid; be very afraid.
Cyprus now looks to take 25 percent from bank accounts of wealthy
NICOSIA — Cyprus said on Saturday it was looking at seizing a quarter of the value of big deposits at its largest bank as it races to raise the funds for a bailout from the European Union and to avert financial collapse.
Finance Minister Michael Sarris said “significant progress” had been made in talks in Nicosia with officials from the European Union, European Central Bank and International Monetary Fund.
The sort of money we’re talking is loose change in the EU. It’s petty cash. The real reason of Cyprus is a political move. It’s all about a political slap for the Russians and a bit of a stress test to see that you can do this and then Spain and Portugal and whether they can get away with this!
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