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Cyprus will not leave the euro

March 29, 2013, 15:27 UTC+3
But Cyprus president believes EU is experimenting with his country
1 pages in this article
Photo EPA/ITAR-TASS

Photo EPA/ITAR-TASS

NICOSIA, March 29 (Itar-Tass) – President of Cyprus Nicos Anastasiades believes that the European Union is experimenting with his country, but says that the country will not leave the euro. Anastasiades who took office only in late February, criticised the position of the partners in the euro zone, accusing them of making “unprecedented demands,” which actually turn the country into a guinea-pig. They “are experimenting with Cyprus,” the president stated.

The situation in Cyprus was contained after the country’s authorities reached an agreement with the European Union and the International Monetary Fund (IMF) on a tough crisis bailout plan that envisages restructuring of the country’s leading banks, Anastasiades pointed out.

The Cypriot president made the statements a day after the country’s banking system, shut down on March 16 on the unprecedented Euro Group’s decision on the introduction of a tax on all deposits in all banks in the country, was reopened. This plan of forcing the bank deposit owners to finance the bailout plan was voted down by the parliament. However, on March 25 the authorities of Cyprus reached an agreement with the creditors on a bailout plan that envisages the liquidation of the Cyprus’ second largest Popular Bank (Laiki) and restructuring of the republic’s largest bank – the Bank of Cyprus. Deposits with less than 100 thousand euros will remain intact under this plan, but deposits over 100 thousand euros are frozen and will be subjected to a 40-percent “haircut.” The details are currently being worked out by the troika of creditors together with the financial authorities of Cyprus.

The recapitalisation of the Bank of Cyprus and the payment by it of the Popular Bank’s 9-billion euro debt to the European Central Bank (ECB) that the major financial institution undertakes in accordance with the creditors’ decision, will be made at the expense of shareholders and holders of bonds and large deposits. No European country has ever experienced such an anti-crisis program.

“We have no intention of leaving the euro. We shall not experiment with the future of our country,” Anastasiades emphasised. “We have averted the threat of bankruptcy,” he said. “Despite the tragedy we all are experiencing, the situation has been contained.”

 

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