The eurozone's finance ministers held a conference call this evening (18 March) to discuss the fall-out from the decision to impose a levy of up to 10% on deposits in Cypriot banks as part of the country's €10 billion bail-out agreed on Saturday.
They said that Cyprus would alter the part of Saturday's deal that said that people with deposits of less than €100,000 would be forced to contribute 6.7% of their savings. They did not give further details.
But the ministers insisted that Cyprus would still have to collect the same amount of money – in the region of €5.8bn – raising the prospect that the levy of 9.9% on deposits over €100,000 may increase. The Eurogroup said that it would not provide loans above the €10bn agreed on Saturday to make up the shortfall that the country needs.
A vote in the Cypriot parliament to ratify the measures was delayed for a second day on Monday and is now scheduled to take place on Tuesday as it became clear that Nicos Anastasiades, the country's president, would fail to get the deal approved. After the finance ministers' call Jeroen Dijsselbloem, the Dutch finance minister who chairs Eurogroup meetings, called for a “swift decision” by the Cypriot government and parliament in order to “rapidly implement the agreed measures”.
The unprecedented move to force ordinary citizens to contribute to the financial rescue has prompted anger in Cyprus and caused runs on bank cash machines. Monday was a public holiday in Cyprus and the government has decided to keep all banks closed until Thursday “to safeguard the stability of the financial sector”.
In their statement after this evening's call the finance ministers said that they were “of the view that small depositors should be treated differently from large depositors” and that they reaffirmed “the importance of fully guaranteeing deposits below €100,000”. But it was unclear how this would affect the agreement. They reiterated that the levy was a “one-off measure”.
They defended the general decision of Saturday to force depositors to contribute to the financial rescue. “This measure will - together with the international financial support - be used to restore the viability of the Cypriot banking system and hence, safeguard financial stability in Cyprus,” they said. “In the absence of this measure, Cyprus would have faced scenarios that would have left deposit-holders significantly worse off.”