Looks like the government of Cyprus -that does not represent the best interests of the people as most present governments do not- was too afraid to save the citizens from currency slavery. Read all about this horrible NEWS below.
Cyprus reaches last-minute deal on 10 billion euro bailout
By Jan Strupczewski and Michele Kambas | Reute
BRUSSELS/NICOSIA (Reuters) – Cyprus clinched a last-ditch deal with international lenders to shut down its second-largest bank and inflict heavy losses on uninsured depositors, including wealthy Russians, in return for a 10 billion euro ($13 billion) bailout.
The agreement came hours before a deadline to avert a collapse of the banking system in fraught negotiations between President Nicos Anastasiades and heads of the European Union, the European Central Bank and the International Monetary Fund.
Without a deal, Cyprus’s banking system would have collapsed and the country could have become the first to crash out of the European single currency.
Swiftly backed by euro zone finance ministers, the plan will spare the Mediterranean island a financial meltdown by winding down the largely state-owned Popular Bank of Cyprus, also known as Laiki, and shifting deposits below 100,000 euros to the Bank of Cyprus to create a “good bank”.
Deposits above 100,000 euros in both banks, which are not guaranteed under EU law, will be frozen and used to resolve Laiki’s debts and recapitalize Bank of Cyprus through a deposit/equity conversion.
The raid on uninsured Laiki depositors is expected to raise 4.2 billion euros, Eurogroup chairman Jeroen Dijssebloem said.
Laiki will effectively be shuttered, with thousands of job losses. Officials said senior bondholders in Laiki would be wiped out and those in Bank of Cyprus would have to make a contribution.
An EU spokesman said no across-the-board levy or tax would be imposed on deposits in Cypriot banks, although the hit on large account holders in the two biggest banks is likely to be far greater than initially planned. A first attempt at a deal last week collapsed when the Cypriot parliament rejected a proposed levy on all deposits.
Cyprus government spokesman Christos Stylianides said: “We averted a disorderly bankruptcy which would have led to an exit of Cyprus from the euro zone with unforeseeable consequences.”
Asked about the level of losses on uninsured depositors in Bank of Cyprus, he told state radio: “The assessment is that it will be under or around 30 percent.”
The Cyprus central bank said the agreement had also avoided the disorderly default of Laiki Bank.
Among Cypriots, there was a mood of wariness about the deal.
“How long will it last?” asked Georgia Xenophontos, 23, a hotel receptionist in Nicosia. “Why should anyone believe anything this government says?”
But many in the capital appeared intent on enjoying a sunny holiday morning, drinking coffee at pavement cafes and watching camera crews filming people drawing money from bank machines.
German Finance Minister Wolfgang Schaeuble said Cypriot lawmakers would not need to vote on the new scheme, since they had already enacted a law on procedures for bank resolution.
At a news conference in Berlin, Schaeuble said the agreement was “much better” from Germany’s perspective than the deal last week that would have hit small depositors and was rejected by the Cypriot parliament.
The new deal offers the country the best chance of getting back on its feet, Schaeuble said.
Anastasiades is expected to make a statement at some point after his return to Cyprus at 1:30 p.m. EDT.
Lefteris Christoforou, vice-chairman of the ruling Democratic Rally party, said it was important that Cyprus had avoided a chaotic bankruptcy. “It is a bad deal, but the extreme scenario we had to contend with was worse.”
A senior source in the Brussels talks said Anastasiades threatened to resign at one stage on Sunday if pushed too far.
The Conservative leader, barely a month in office and wrestling with Cyprus’s worst crisis since a 1974 invasion by Turkish forces split the island in two, was forced to abandon his efforts to shield big account holders.
Diplomats said the president had fought hard to preserve the country’s business model as an offshore financial center drawing huge sums from wealthy Russians and Britons but had lost.
The EU and IMF required that Cyprus raise 5.8 billion euros from its banking sector towards its own financial rescue in return for 10 billion euros in international loans. The head of the EU rescue fund said Cyprus should receive the first emergency funds in May.
IMF chief Christine Lagarde said the agreement was “a comprehensive and credible plan” that addresses the core problem of the banking system.
“This agreement provides the basis for restoring trust in the banking system, which is key to supporting growth,” she said in a statement.
With banks closed for the last week, the Central Bank of Cyprus imposed a 100-euro daily limit on withdrawals from cash machines at the two biggest banks to avert a run.
French Finance Minister Pierre Moscovici rejected charges that the EU had brought Cypriots to their knees, saying it was the island’s offshore business model that had failed.
“To all those who say that we are strangling an entire people … Cyprus is a casino economy that was on the brink of bankruptcy,” he said.
The euro gained against the dollar on the news in early Asian trading.
Analysts had said failure to clinch a deal could have caused a financial market sell-off, but some said the island’s small size – it accounts for just 0.2 percent of the euro zone’s economic output – would have limited contagion.
Cyprus’s banking sector, with assets eight times the size of the economy, has been crippled by exposure to Greece, where private bondholders suffered a 75 percent “haircut” last year.
Without a deal by the end of Monday, the ECB said it would have cut off emergency funds to the banks, spelling certain collapse and potentially pushing the country out of the euro.
Under the bailout agreement, Laiki’s ECB funds will pass to Bank of Cyprus, and the central bank will “provide liquidity to BoC in line with applicable rules”.
Anticipating a run when banks reopen on Tuesday, parliament has given the government powers to impose capital controls.
On Tuesday, the 56-seat parliament had rejected a levy on depositors, big and small. Finance Minister Michael Sarris then spent three fruitless days in Moscow trying to win help from Russia, whose citizens and companies have billions of euros at stake in Cypriot banks.
The tottering banks held 68 billion euros in deposits, including 38 billion in accounts of more than 100,000 euros – enormous sums for an island of 1.1 million people that could never sustain such a big financial system on its own.
(Additional reporting by Luke Baker, John O’Donnell, Robin Emmott, Philip Blenkinsop and Rex Merrifield in Brussels, Michele Kambas, Karolina Tagaris, Costas Pitas in Nicosia and Lionel Laurent in Paris. Writing by Paul Taylor, editing by Giles Elgood and Will Waterman)
How much longer will the constructed economies based upon valueless currency manufactured by these privately owned banks be tolerated? They own all of this currency and must be told to take it and go as they are kicked out of every country and eliminated from this Planet. They continue their strangle-hold on the public by manipulation through the media (that they own) and through the continued use of graft, greed and organized crime. We owe it to the Globe to continue to do our best to awake the population to the sad reality that there is no longer any need of this system to exist. All poverty, famine, disease and warfare is also a construct that is employed through those who gain by the continued enslavement of the population through this valueless currency manufactured by these privately owned banks. Soon the next level of Human Civilization will be introduced to the Globe by the New Global Communist Party.