Eurogroup Statement on Cyprus

Author (Corporate)
Series Title
Series Details 16.03.13
Publication Date 16/03/2013
Content Type

The Eurogroup (and the IMF) welcomed the political agreement reached with the Cypriot authorities on the 16 March 2013 on the cornerstones of the policy conditionality underlying a future macroeconomic adjustment programme.

Cyprus would become the fifth eurozone country to receive a rescue package after eurozone ministers reached agreement following all-night talks on the 15 March 2013. The EU and IMF would provide up to €10bn bailout funds to Cyprus, which faced bankruptcy in May 2013.

In a departure from all previous rescue packages, people with Cypriot bank accounts would share in the pain. People with less than €100,000 would face a 6.75% levy, while those with more would pay 9.9%. The one-off tax was expected to raise €5.8bn. Depositors would be compensated with the equivalent amount in shares in their banks.

This aspect of the deal provoked public anger. Cyprus's parliament postponed an emergency session on the controversial bailout deal for the country's banks from the 17th to the 19th March 2013.

Some commentators suggested that the EU decision to impose a levy on bank deposits might have been motivated by a belief that a lot of the money in Cypriot banks belonged to Russian money-launderers.

On the 18 March 2013, Wolfgang Schäuble, German finance minister, deflected blame for a European bailout deal for Cyprus that foresees hitting small savers in the Mediterranean island's banks, saying this solution had not been a German idea and that he was open to it being changed.

Source Link http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-cyprus-16-03-13/
Related Links
ESO: Background information: Details sketchy on Eurogroup bailout of Cyprus http://www.europeansources.info/record/details-sketchy-on-eurogroup-bailout-of-cyprus/
EUObserver, 16.03.13: Savers to share the pain in €10bn Cyprus bailout http://euobserver.com/economic/119448
IMF: Press Release, No.80, 2013: IMF Statement on Cyprus at the Eurogroup Meeting http://www.imf.org/external/np/sec/pr/2013/pr1380.htm
BBC News, 17.03.13: Cyprus bailout: Parliament postpones debate http://www.bbc.co.uk/news/world-europe-21819990
Deutsche Welle, 17.03.13: Cyprus bailout levy vote postponed http://www.dw.de/cyprus-bailout-levy-vote-postponed/a-16679608
Deutsche Welle, 16.03.13: Cyprus set to receive international bailout http://www.dw.de/cyprus-set-to-receive-international-bailout/a-16678445
Spiegel Online International, 16.03.13: Hitting the Savers: Euro Zone Reaches Deal on Cyprus Bailout http://www.spiegel.de/international/europe/savers-will-be-hit-as-part-of-deal-to-bail-out-cyprus-a-889252.html
Famagusta Gazette, 17.03.13: ECB tell Cyprus to get moving and approve bailout before Tuesday http://famagusta-gazette.com/ecb-tell-cyprus-to-get-moving-and-approve-bailout-before-tuesday-p18554-69.htm
EurActiv, 18.03.13: Cypriot president says he was forced to accept EU bailout http://www.euractiv.com/euro-finance/president-eu-blackmailed-cyprus-news-518572
EUObserver, 18.03.13: Cyprus heading for bank run after bailout deal http://euobserver.com/economic/119450
Blog: The Economist: Schumpeter, 16.03.13: Unfair, short-sighted and self-defeating http://www.economist.com/blogs/schumpeter/2013/03/cyprus-bail-out?fsrc=scn/tw/te/bl/Unfairshortsighteddefeating
EurActiv, 18.03.13: Eurozone starts rowing back on Cyprus bailout deal http://www.euractiv.com/euro-finance/euro-zone-starts-rowing-back-cyp-news-518591
BBC News, 18.03.13: Cyprus told it can amend bailout, as key vote postponed http://www.bbc.co.uk/news/world-europe-21832187
Deutsche Welle, 18.03.13: Cyprus parliament delays vote on controversial bailout package http://dw.de/p/17zWz
Der Spiegel Online International, 18.03.13: Cyprus Bailout: Widespread Anger Erupts Over Bank Account Levy http://www.spiegel.de/international/europe/widespread-anger-erupts-over-bank-account-tax-for-cyprus-bailout-a-889439.html
Cyprus Mail, 18.03.13: A rescue plan that will kill us (via PressEurop) http://www.presseurop.eu/en/content/article/3553111-rescue-plan-will-kill-us
EUObserver, 19.03.13: EU defiant over €5.8bn raid on Cypriot savings http://euobserver.com/economic/119469
EUObserver, 19.03.13: Experts question EU money-laundering probe on Cyprus http://euobserver.com/economic/119476
EUObserver, 19.03.13: Cyprus overshadows EU leaders' Berlin meeting http://euobserver.com/economic/119470
EUObserver, 18.03.13: Germany and ECB blame each other for Cyprus levy http://euobserver.com/economic/119463
ESO: Background Information: Statement by the Eurogroup President on Cyprus http://www.europeansources.info/record/statement-by-the-eurogroup-president-on-cyprus/

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