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Journalism of Courage
Lawmakers took steps late Friday to revise a formula for obtaining a bailout of Cypruss banks but faced strong signals that the plan would not pass muster with international lenders.
The Parliament put off until later this weekend a vote on a crucial new proposal that would confiscate 22 to 25 percent of uninsured deposits above 100,000 euros through a new tax on account holders in one of the nations most troubled banks.
So with a deadline imposed by the European Central Bank looming on Monday,it appeared there was still no immediate path to a lifeline of 10 billion euros,or 13 billion,that Cyprus needs to keep its banks from collapsing.
Cypruss so-called troika of lenders the International Monetary Fund,the European Commission and the European Central Bank must still approve any plan. President Nicos Anastasiades was scheduled to fly to Brussels on Saturday to meet with European Union leaders,a spokesman said.
Monday is a holiday in Cyprus but banks are supposed to open on Tuesday for the first time in more than a week. There is widespread fear of a classic bank run. On Friday,Cypriots jammed into supermarkets after lining up all day Thursday at ATMs to withdraw as much cash as possible. Gas stations were taking cash only,and some retailers reported that they would no longer accept credit.
One of the provisions Parliament approved Friday would impose new restrictions on withdrawing cash or moving money out of the country when the banks reopen. These new capital controls would prohibit or restrict check-cashing and bar premature account closings or any other transaction the authorities deemed unwarranted.
Lawmakers also voted to restructure the nations largest and most troubled bank,Laiki Bank,by splitting off its troubled assets into a so-called bad bank. Accounts with no problem would be transferred to the nations largest financial institution,the Bank of Cyprus. Lawmakers also voted to require that any bank on the verge of bankruptcy be split apart in the same way.
By effectively shutting down one of the banks needing support,the government could lower the 5.8-billion-euro sum that international lenders are demanding in exchange for a bailout.
