EC Threatens Cyprus with Bank Collapse, Russia Cries Foul

Finance | March 20, 2013, Wednesday // 20:50|  views

Cypriots protest against EU bailout and plans for a levy on bank deposits. Photo by EPA/BGNES

Banks in Cyprus will not resume work until the country accepts a bailout plan to rescue the local financial market, stated a European Commission spokesperson Wednesday.

In the statement, the official in effect said that the EC supports the position of Germany, which has requested the Cypriot government to stop financing banks by Friday.

"At present, the European Central Bank is supplying half the financial resources for the system in Cyprus. If the ECB flow is shut down, banks in Cyprus will default," added the EC spokesperson.

At the same time, Russian PM Dmitry Medvedev has issued a strong statement against the EC approach, likening it to that of "a bull in a china shop."

"All possible mistakes that could have been made in handling the situation have actually been already made, including undermining trust in financial institutions as a whole, not only in those located in Cyprus," said Medvedev.

The Russian PM added that the solution offered by the EU could create a string of new problems that would hinder recovery and lead to even greater losses.

Earlier Wednesday, German Chancellor Angela Merkel called on authorities in Cyprus to refrain from involving third parties such as Russia in attempts to surmount its deep financial crisis.

All the same, Cypriot Finance Minister Michalis Sarris travelled to Moscow to renegotiate the terms of a 2011 loan from Russia.

No concrete agreement has been reached Wednesday, but talks are set to continue Thursday.

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Tags: trust, default, Russia, Russian, Cyprus, cypriot, banks, European Commission, EC, Angela Merkel, Michalis Sarris, German, Germany, financial crisis, bailout, Dmitry Medvedev, European Central Bank, ECB


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