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Eurozone Chief Says Cyprus Risk

Jeroen Dijsselbloem
Jeroen Dijsselbloem

With Cyprus frantically trying to find a way to keep its banks and economy from collapsing after rejecting a demand to confiscate up to 9.9 percent of bank deposits to help pay for a bailout, Eurozone Chairman Jeroen Dijsselbloem said the crisis is threatening the financial bloc.
Speaking to the European Parliament in Brussels, he said he hoped Cyprus would still try to seize some of the accounts of bank depositors who are not to blame for their bank’s mistakes in holding Greek bonds that were devalued, causing the institutions to take a 4.5 billion euros ($5.8 billion) loss.
“The Cypriot authorities are now looking for an alternative package. Whether that is possible within the outline that we have, in order to make it sustainable, is for me still a question,” he said, according to Reuters.
“Within the Eurogroup we have said we will allow time and space for the Cypriots to look at different angles and to come up with different, alternative proposals. But they have to be financially sound, they have to be financially and economically sustainable and, of course, politically feasible. So, I΄m not sure that this package is completely gone and failed, because I don΄t honestly see many alternatives. There is of course a different way to do the levy, and we΄re very open to a more fair approach to the way the levy is structured”, he added.
We have to look at debt sustainability, we have to look at burden-sharing, we have to look at future growth and a new model for the banking system which is so important for Cyprus, Dijsselbloem noted. “…The situation in Cyprus was very, very specific and very, very problematic in the financial sector so that, no, there would not be the same kind of package and approach to any other country” he said.

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