Brussels, 19/06/2013 (Agence Europe) - There will be no substantial change - if change there be - to the Cypriot aid plan during the Eurogroup meeting on Thursday 20 June, a European source said on Wednesday 19 June.
Eurozone finance ministers are to discuss the letter addressed last week to the “troika” (Commission, ECB, IMF) by the Cypriot president, Nicos Anastasiades (see EUROPE 10865). Anastasiades calls on Europeans to find a solution to the liquidity problems suffered by the island's banks.
The Cypriot government agrees with the interpretation of this affair by the Financial Times on Wednesday. Firstly, it does not call for a complete reversal of the memorandum of understanding. Anastasiades had clearly reiterated his country's commitment to implementing the aid plan. The cat set among the pigeons by the Cypriot authorities is said to be aimed at attracting the attention of their partners to major issues that hamper the accomplishment of the memorandum's objectives.
Such a clarification should be welcomed by Germany, which called on Cyprus to apply the terms of the agreement in a coherent and rapid manner as, at this stage, it saw no reason to adjust the architecture of the programme. It is to be noted that the European Commission announced, on Wednesday, that it had launched a task force intended to provide technical assistance to the island in the implementation of reforms.
On Thursday, the Eurogroup will also address recommendations made in the reports on combating money laundering in Cyprus, and on the need to amend the memorandum in this respect.
According to another Cypriot source, the conversion of uninsured deposits in the Bank of Cyprus and Laiki should allow banks to constitute an optimal quality capital ratio of around 13%, albeit agreed at 9%. “We have the feeling that the 'troika' does not know what it is doing”, the source said with concern. This difference may be explained by the fact that a higher ratio is necessary in order to also cover the possible additional losses on non-performing loans. (EL/transl.jl)