Showing posts with label Cyprus. Show all posts
Showing posts with label Cyprus. Show all posts

EMERGENCY BAILOUT PLAN OF CYPRUS

no-reply@blogger on Sunday, April 21, 2013

Amid the lasting euro zone crisis, yet another country was hit with the tide as Cyprus clings on to the bail out plans purported by its creditors: the European commission, the ECB and the IMF. Having a hard time adjusting with the alarming economic downfall Government of Cyprus has had to rely on the only readily available source among its options.

In order to raise the decided 5.8 billion Euros the Cypriot government will have to pay heed to some of the rather stringent and less welcome capital controls and orders. As a part of the settlement plan put forward by the aforementioned financial aides, the second largest bank in the country will have to be closed down. An expected result would be huge losses faced by wealthy savers.

According to the bailout plan’s terms; Laiki, commonly known as the Cyprus Popular Bank will be forced to shut down with all the big savers would also suffer tragic losses in lieu of equity shares. It has been decided that any of the depositors with an amount of less than a hundred thousand Euros in Laiki would be spared, while the rest would be subject to a portion of the hit for bailing out euro zone’s latest crisis economy. The aforementioned was brought into action after IMF hardened its stance towards the first country being forced out of the common currency; euro. The major reason behind this change of tone has been a great level of pursuance at the hands of Germany. German finance minister Schauble believes: “the situation has worsened”

he further added that:

“It is well known that I will not let myself to be blackmailed by no one or nothing, I am aware of my responsibility for the stability of the euro. If we take the wrong decisions, we’ll be doing to Euro a great disservice”

The events leading to such drastic measures were evident as the recent threat by European Central Bank (ECB) to cut off all monetary support to Cypriot banks could have sealed the fate of Cyprus’ removal from the Euro, had the emergency meeting not been called among the country’s financial aid trio. It is expected that Russians will take the greatest hit as they apparently have the largest deposits in the said bank with an estimate going up to 20 billion Euro, out of the total 68 billion deposits in Cypriot banks.

In the recent days, Nicos Anastasiades President of Cyprus had held meetings with European Union officials before the meeting of the Euro group to discuss the final terms of the bailout. Apparently the drastic measures had to be taken because little or no progress was reported from the earlier meetings –the actual amount supposed to be raised was 17 billion Euro out of which creditors were ready to pay for only 10 billion. Now the agreement that was finalized on Monday would help reduce the deficit, though not on the terms of Anastasiades.



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Limitations on Money Withdrawal in Cyprus

no-reply@blogger on Saturday, April 6, 2013

The banking curbs have been placed on Cypriots for prevention of money from leaving the country. It was said that this limitation was set for a week, but now the government has warned that these would be placed for more than a week. It is said that these curbs would stay longer than what is expected. This attempt is made to revive the economy of the country. Moreover, a cash withdrawal limit was also set, and nobody was allowed to withdraw more than 253 pounds a week. This limit is known to be set for a month or so. A number of restrictions have been set, and they would be lifted in some time.

As the central bank estimates, the limitations would be lifted up soon. The government is known to have been reviewing the restrictions on a daily basis from the day the restrictions were set. This attempt is being taken to take steps to lift up the limitations and as the circumstances improve soon. Moreover, the economy of Cyprus is at a serious threat from the capital flights. All these curbs and controls for not letting anybody leave the country with his money along with settig a limit on withdrawal are done to prevent people from removing all their saving at once. Curbs are set that do not allow people to take more than the limited amount, abroad. They have set a limit of 1000 Euros for anybody leaving the country. Nobody can take more than this amount.

There are some Cypriots who believe that all this would be lifted soon. However, others say that whichever countries have set such limitations in the past have never done it temporarily. The people of Cyprus are showing concerns about the effects on their lives and businesses, though some are quiet, hoping for some better change.

The bailout scheme includes that the second largest bank of Cyprus would be troubled. The Laika bank, that is the second largest bank of Cyprus, holds many accounts. Since the bank would be wounded, people having their accounts in this bank would also suffer. News from the Cyprus government announced that 25% of the salary would be deducted. Even the people on higher positions, such as ministers, have agreed to get their salaries deducted by 20%. Thus, all these steps are being taken in Cyprus, with some good hopes. The ministers, lawyers and people on higher positions, that earn a great deal of money every month are ready to cut down their salaries a little bit.

The people of Cyprus have their fingers crossed. They are expecting the curbs and the limitations to be lifted up soon, so that they could get out of these limitations and live a free life without any conditions for the money that can be taken in a travel, or the amount of money to withdraw from the ATM. The people of Cyprus are waiting eagerly to be free.



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Savers in Banks Of Cyprus Could Lose a Large Sum of Money

no-reply@blogger on

Everybody is aware of the Cyprus bank crisis that is going on these days. Not only is the Cyprus government and its banking sector involved, but the whole public is also involved, as they have to face a few restrictions on the withdrawal amount. Those having saving bank accounts are expected to lose 60% of their belongings. This is what was known by the finance ministry and banking officials. A large number of deposits were expected to be converted by the banks into bank shares.

The savers are also on the verge of losing a further 22.5% of their savings in case the bank needs capitalization. This percentage amount may vary and the mentioned one is the result of the assessment made by the officials. The exact figure may not be known right now.

It is said that after a period of two weeks, finally the banks were opened on Thursday. However, the transactions that one could make were restricted by the new regulations. One could not withdraw more than 300 Euros from the bank per day. Moreover, as about the restrictions placed on the amount of cash one could take with him abroad, the amount was set to 1000 Euros. A few restrictions on the checks were removed. However, they allowed the loosening of the check restrictions only after they paid an amount of money to government agencies.

Moreover, there are furthermore restrictions placed on what can be taken away from the control of the Cyprus authorities. This includes the northern part of Cyprus, where they have no control. It is said that the restrictions may last for months. Previously, a limit of weeks was set but now, it is said that months could also be possible.



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Tension Prevailed Over Cyprus

no-reply@blogger on Friday, March 29, 2013

The Central Bank of Europe said to Cyprus government that it would remove all its support for the banking sector of Europe. They warned them, saying that if the government did not agree on bailout, then their support would be withdrawn. This led the politicians to think of shifting to the ready to use plan B. So what is Plan B about? Well, it says that Laiki bank, that is the second largest bank, should be reconstructed. This new plan is expected to remove bankruptcy.

The streets were full of tensions, and worry prevailed all over. The bank workers started crowding up on streets and protesting. The bank workers started gathering in huge crowds in front of the parliament building. The people were protesting because they didn’t want the second largest supporting bank to be split. The news of closing down of Laiki brought tension to everyone, and nobody wanted it to be split into a bad part and a good part. All this was because of the ultimatum given by ECB. They gave them a time limit until Monday, and said that they would remove support if their conditions were not agreed by Monday. The president said that they would decide a criterion that would help them draw up a large amount of money. They had the choice to raise many billions of Euros or see the collapse of their banking sector.

The tensions caused another bill to be passed. It was about putting restriction on the drawing out of money from the country bank. The tension rose mainly because, if the bailout was not passed, the country would suffer huge loss as two of its large banks, the ECB and the Laiki, would collapse. The Laiki cash machines were full of queues of people and it resulted in the stock market being closed. The political leaders in Cyprus started emergency discussions to raise a huge amount of money.

Despite of all the tensions that prevailed the central bank governor of Cyprus said that he was hopeful. He knew that the deal would be reached in time, and there won’t be many problems. He was hopeful that soon a plan would be made to support Cyprus, before the deadline of Monday, that the ECB issued them. This also resulted in Russia being able to get involved in the personal matters of the European Union. In fact, some even think of the situation as an amazing chance for Russia to play with the European Union. However, discussions are going on, and emergency meetings are held all around, but the final conclusions are not coming to light. Things do not seem clear.

When Russia was asked to buy the assets in Cyprus, the three major banks of Russia, refused. However, some gas supplies have been discovered, and other natural resource companies are ready to tap their resources. Time is running for Cyprus as Monday is the deadline that is not too far. Cyprus needs to reach a conclusion as soon as possible because time is running out. Let us see what finally happens.



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Cyprus Economic Crisis: Do or Die for Cyprus

no-reply@blogger on Tuesday, March 26, 2013

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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