Cyprus Rejects Deposit Levy in Blow to European Bailout Plan
And now, step two : blackmailing and arm twisting till they accept ... in the mean time the big ones will withdraw their money and the small ones will pay the bill
ECB Says It Will Provide Liquidity To Cyprus
The ECB has spoken.
The euro and the S&P 500 just jumped on headlines (via Bloomberg) that the ECB will provide liquidity to Cyprus within the existing rules governing the central bank.
The ECB also noted that it was in contact with its "troika" partners (the EU and IMF) regarding the decision today in the Cypriot parliament not to pass the controversial Cyprus bank bailout deal hatched with the EU over the weekend.
The meaning of the specification "within existing rules" is unclear, but it could refer to the ECB's Emergency Liquidity Assistance program, the last recourse for banks in the Eurosystem. (Many now fear a full-blown run on Cypriot banks when they finally re-open.)
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Cyprus’s parliament rejected an unprecedented levy on bank deposits, dealing a blow to European plans to force savers to shoulder part of the country’s bailout in a standoff that risks renewed tumult in the euro area.
Cypriot legislators in the capital Nicosia voted 36 against the proposal with none in favor in a show of hands today. There were 19 abstentions. Hammered out by euro-area finance chiefs at the weekend, the deal had sought to raise 5.8 billion euros ($7.5 billion) by drawing funds from Cyprus bank accounts in return for 10 billion euros in international aid.
Stocks dropped and the euro fell to a three-month low against the dollar at the prospect of impasse in Cyprus. While the Mediterranean island nation accounts for less than half a percent of the 17-nation euro economy, European officials including Dutch Finance Minister Jeroen Dijsselbloem said that Cyprus must contribute to its own bailout, while stressing that the Cyprus situation is unique.
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