Traders braced for turbulence amid bailout chaos in Cyprus

Monday, March 18, 2013
By Paul Martin

Traders are braced for a turbulent day on European stock markets as leaders in Brussels and Nicosia try to secure a bailout for Cyprus amid a storm of controversy.

By Louise Armitstead
17 Mar 2013

A Cypriot parliamentary vote on the proposed €10bn (£8.6bn) international bailout, which also includes plans for a raid on bank deposits, is expected to be held on Monday. President Nicos Anastasiades said the bail-out was “painful” but necessary to avoid a “disorderly bankruptcy”.
“I chose the least painful option, and I bear the political cost for this, in order to limit as much as possible the consequences for the economy and for our fellow Cypriots,” the president said in a televised address to the nation.

But, he delayed the vote despite intense pressure from the European Central Bank to hold it on Sunday.

Christopher Pissarides, a Nobel Prize-winning economist and chairman of the government’s economic advisory committee, warned that the island’s fragile economy would collapse within “two or three days” if the legislation was not passed.

But the proposal to impose an “up front one-off stability levy applicable to resident and non-resident depositors” has sparked chaos in Cyprus and anger across the EU. The tax is planned as a 9.9pc raid on deposits of more than €100,000 and 6.7pc on all other deposits.

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