Eurozone finance ministers said they were discussing “all options” on a bail-out for Cyprus but insiders said any concrete decision was likely to be delayed until after the impending elections.
Jeroen Dijsselbloem, the Dutch new president of the Eurogroup, said the 17 ministers were “looking at the complete package” for a Cypriot rescue plan. He described the crisis in Cyprus as “complicated” because of the size of the island’s banking sector - around 8 times bigger than GDP. He said the ministers “all agree that a solution has to reached” but added: “We’ll try to reach a decision in March.”
Cyprus requested financial help from Brussels five months ago. However rescue plans have been delayed amid concerns over the size of the bail-out needed, around €17bn, and its potential beneficiaries. Allegations have been made that Cyriot banks are used by Russian money launderers.
Vassos Shiarly, the Cypriot finance minister, rejected reports that the Eurogroup was working on a so-called bail-in of depositors. “The bail-in of depositors is a grossly exaggerated possibility, unlikely to happen,” he said. “We will not accept it under any circumstances and I don’t think it creates any way forward.”
European leaders have demanded a sell-off of national assets to raise finances - an idea rejected by the current left-wing leaders. Raoul Ruparel from the think tank Open Europe said a Greek-style bail-out was “almost impossible” for Cyrprus because its government does not have comparable legal authority over its sovereign bonds.
Greece was also on the agenda: Athens has a list of “prior actions” it has to complete to secure the February tranche of its bail-out.
The continued strength of the euro against the dollar and the pound was discussed amid fears of global “currency wars.”