Brussels, 03/07/2012 (Agence Europe) - Cypriot Finance Minister Vassos Chiarly said the reason behind his country's recent request for international financial aid is its banking sector's exposure to the Greek economy and in particular to the losses suffered in the restructuring of Greek debt (see EUROPE 10644). “We do face a problem, a problem which I believe, with the assistance of Europe and the good will that we are going to receive from the Troika … we will overcome”, he said during discussions with the European Parliament (EP) economic and monetary affairs committee in Strasbourg on Monday 2 July. He added that Cyprus needed European funding to help its banking sector, hit hard by the “participation of the private sector” in the debt restructuring which “left Greek banks exposed”.
The “Troika”, representatives of the institutions which will provide the assistance (European Commission, ECB and IMF), has been in Nicosia since Monday and will remain there all week to assess the Cypriot budgetary and macroeconomic situation and the aid the island will need.
In a highly unusual scenario, Cyprus has just picked up the reins of the six-monthly presidency of the EU Council of Ministers from Denmark and will have the demanding task of chairing Council negotiations on budgetary and financial issues, when its own economic situation has been eroded. One of the priorities of the Cypriot Presidency will be to conclude negotiations on the “two-pack” legislative package, which complements the revised Stability Pact. Elisa Ferreira (S&D, Portugal), one of the two EP rapporteurs on this matter made the point strongly to Chiarly that the Council should remain “open” to the EP amendments on the debt redemption fund and the Eurobonds roadmap.
The Cypriot Presidency will also monitor the coming into force of the new rules on capital banks will be required to hold, as well as make progress on taxing financial transactions and “implement and strengthen economic governance”, Chiarly said.
The minister also welcomed the conclusions of the European summit of 28-29 June, expressing the view that these decisions “help to re-inspire confidence to our fellow European citizens and also to the markets”. He added that they should help Europe to “return to new growth paths”. Chiarly agreed the need to look as quickly as possible at setting up a single banking supervising mechanism, as the eurozone leaders have asked. However, the recommendations of the Liikanen group on structural aspects of the EU banking sector must be awaited, he suggested. The recommendations are expected by October. (EL/transl.rt)