Under huge pressure from angry citizens, the Cypriot government has submitted a draft
bill to its Parliament scrapping its proposed controversial levy for those with
deposits of €20,000 or less.
There has
been enormous anger that small savers were to be hit by the emergency levy,
given that the EU has legislation in place designed to ensure that the cash of
small depositors is protected in the event of a bank failure.
Since
announcing the original bailout deal, Cyprus has faced calls from its central
bank governor (aptly named Panicos!) and from Eurozone finance ministers to
raise the exemption threshold up to €100,000, but to make good the consequent
cash shortfall by increasing the levy on larger deposits.
It is
understood that the draft bill does not raise the proposed
levies of 6.75% on deposits between €20,000 and €100,000,
and 9.9% on deposits over €100,000 in order to balance the
expected €400 million shortfall that the new exemption will cause. Given that the Troika have made it clear that
no further funding will be provided by them, it is not clear how this draft bill
can lead to the successful bailout that the Cypriots so urgently need.
In the meantime, the Cypriot
banks remain closed.
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