Brussels, 11/02/2013 (Agence Europe) - On Monday 11 February, Cypriot finance minister Vassos Shiarly said private owners of Cypriot sovereign debt (gilts) and holders of Cypriot bank accounts would not be made to pay as part of the country's bailout currently being negotiated.
On arriving for the Eurogroup meeting in Brussels, Shiarly said that bail-in of depositors was “an unlikely scenario, we will not accept it”. In an interview the same day with the Dow Jones, Shiarly said that any private sector involvement (ie writedown) was not possible, given the structure of the debt (mostly hold by the country's banks). He said that forcing savers to take losses ran counter to the Cypriot constitution, but said the option had been brought up by the eurozone.
A document quoted in Sunday's Financial Times put the cat amongst the pigeons by revealing that in order to make the Cypriot debt sustainable, a difficult job given the huge bank recapitalisation needs, investors and savers might be made to cough up. The document said that this would reduce the amount of financial aided by two-thirds from €16.7 billion to €5.5 billion.
A spokesperson for Euro Commissioner Olli Rehn said that the idea had not come from the European Commission.
The head of the Eurogroup, Jeroen Dijsselbloem, said that no final decisions about the Cypriot bailout were expected on Monday and one would have to wait until mid-March when the new Cypriot government is in place (Cypriot presidential elections are taking place at the weekend). Meanwhile, the eurozone must take advantage of the time it has to advance as far as possible on the complicated Cypriot bailout question, said Dijsselbloem.
Asked about the Financial Times article, Dutch representative Frans Weekers said that all options for Cyprus would be on the table. French minister Pierre Moscovici said there would be a discussion about various ideas for a viable programme.
Jörg Asmussen, a member of the ECB's Executive Board, warned in an article in Handelsblatt of the “high political and financial costs” of the aid talks stretching out in time, saying that an agreement must be initialled in March. (EL/transl.fl)