The president of Cyprus might visit snow covered Brussels this Sunday for a meeting with government officials of Europe and International Monetary Fund (IMF) delegates on the major concern of the economic crisis for deciding whether Cyprus will be the first country to be allowed for adopting currency other than pound. The economy of this island is on the verge of collapsing.
There are possibilities that the Cypriot president Nicos Anastasiades will meet International Monetary Fund executive Christine Legarde, and the European Central Bank head Mario Draghi. Presidents of European council and European commissions, Herman Van Rompuy and Jose Manuel Barroso, are also expected to join this meeting after cancelling EU-Japan summit and returned to Brussels due to the emergency situation created in Cyprus.
Anastasiades would probably unveil novice suggestions to strike wealthy Cyprus banking traders that contain large levied amounts on their deposit funds so that it could help for earning one-third of the €17 billion rescue fund; the country is in stiff need to rescue it from the inevitable sellout. He proposed last week for minimizing the taxes by 10% to lure foreign investors of Russia and Britain of taking money out of the country. It is now being strained for doubling that to 20%.
Although the ventures of Cyprus are not that high, the European Central Bank has threatened to stop midterm funds and further piling up the financial sector of Cyprus unless a deal was presented which satisfied Island’s gradually raising creditors of the Euro zone that were led by Germany.
The largest economy of the Euro zone has found that Cyprus shrunk a widespread of the financial sector; that is estimated to be about eight times larger than the economy of this country.
Finance minister of Germany, Wolfgang Schäuble has said to a German Sunday paper that he would not allow himself to be blackmailed by anyone. He is aware of his responsibilities for stabilization of Europe.
There will be emergency meetings of finance ministers of the Euro zone at Eurogroup after Anastasiades’s meetings. He has accepted much bigger exclusion for rich depositors’ money. and concluded by saying that the persons having more than €100,000 in the bank of Cyprus will be levied 20% taxes, and same apply for depositors of other banks with 4% taxes.
This deal that was presented in parliament is still pending for its confirmations, after collectively rejecting the tax saver agreement. If the agreement between Cyprus and Eurogroup is settled then the parliament would be called urgently.
The EU’s economic affairs chief Olli Rehn has said “there are only hard choices are left”. Also, the European Central Bank policymaker Ewald Nowotny also specified that if the deal is not set before Monday’s deadline then there would be possibilities that the threats of ECB to cutoff the financial support would not set off general crisis across the Euro zone as Cyprus only accounts for 0.2% of Euro zone Gross Domestic Product (GDP). He also confirmed that the Austrian depositors’ money is completely safe, and their funds will never be compromised.
The rescue deal of Cyprus was distorted after lawmakers discarded proposals of including a tax of 6.75% on deposits below €100,000. Due to this cut of taxes the trust of public in Euro projects is breached as fund deposited under €100,000 were confined among the European Union. Banks of Cyprus have €68bn as deposits inclusive of €38bn that are present in accounts of depositors that are greater than €100,000. Officials of the IMF, the EU and ECB have said to the government of Cyprus that some pain of bailout should be carried by the depositors, or there is full risk of their savings being swabbed completely.
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