European governments battled to save Cyprus from financial ruin, seeking to prevent the woes of the euro area’s third-smallest economy from reviving the debt crisis and rattling markets.
Cyprus’s leaders sparred over terms of a 10 billion-euro ($13 billion) bailout with euro-area finance ministers, the European Central Bank and International Monetary Fund in the second Brussels crisis meeting in nine days.
A threat by the central bank to cut off emergency financing for Cyprus’s tottering banks as soon as tomorrow put the Mediterranean island’s leaders before the stark choice of bowing to the creditors’ aid conditions or heading toward potential default and an unprecedented exit from the euro.
“It is not up to us,” German Finance Minister Wolfgang Schaeuble told reporters on his way in to the meeting. “The decision is now with Cyprus.”
The meeting of all 17 euro finance chiefs was delayed by two hours to 8 p.m.
European governments have wrangled over aid for Cyprus for nine months, exposing holes in the euro’s revamped economic management system that was built, piece by piece, since Greece’s ballooning deficit triggered the debt crisis in late 2009.
A package hammered out March 16 in Brussels fell apart three days later when the Cypriot parliament rejected a tax on all bank accounts on the island, forcing Cyprus to hunt for other sources of the 5.8 billion euros demanded by the creditors.
Cyprus has to come up with the same sum to unlock the creditors’ loans, officials said. Finance Minister Michael Sarris said yesterday that bank-deposit levies are back on the table.
“We have to have a solution here tonight, because this is about the stability of the entire euro zone and it would be very bad to put that at risk,” Luxembourg Finance Minister Luc Frieden.
To contact the reporters on this story: James G. Neuger in Brussels at [email protected]; Stephanie Bodoni in Brussels at [email protected]; Stefan Riecher in Brussels at [email protected]
To contact the editor responsible for this story: James Hertling at [email protected]
Cyprus’s leaders sparred over terms of a 10 billion-euro ($13 billion) bailout with euro-area finance ministers, the European Central Bank and International Monetary Fund in the second Brussels crisis meeting in nine days.
A threat by the central bank to cut off emergency financing for Cyprus’s tottering banks as soon as tomorrow put the Mediterranean island’s leaders before the stark choice of bowing to the creditors’ aid conditions or heading toward potential default and an unprecedented exit from the euro.
“It is not up to us,” German Finance Minister Wolfgang Schaeuble told reporters on his way in to the meeting. “The decision is now with Cyprus.”
The meeting of all 17 euro finance chiefs was delayed by two hours to 8 p.m.
European governments have wrangled over aid for Cyprus for nine months, exposing holes in the euro’s revamped economic management system that was built, piece by piece, since Greece’s ballooning deficit triggered the debt crisis in late 2009.
A package hammered out March 16 in Brussels fell apart three days later when the Cypriot parliament rejected a tax on all bank accounts on the island, forcing Cyprus to hunt for other sources of the 5.8 billion euros demanded by the creditors.
Cyprus has to come up with the same sum to unlock the creditors’ loans, officials said. Finance Minister Michael Sarris said yesterday that bank-deposit levies are back on the table.
“We have to have a solution here tonight, because this is about the stability of the entire euro zone and it would be very bad to put that at risk,” Luxembourg Finance Minister Luc Frieden.
To contact the reporters on this story: James G. Neuger in Brussels at [email protected]; Stephanie Bodoni in Brussels at [email protected]; Stefan Riecher in Brussels at [email protected]
To contact the editor responsible for this story: James Hertling at [email protected]