Agreement between Cyprus and European Union

Map of Cyprus in EuropeAn agreement was signed hours before the deadline in order to avoid the banking structure collapse between the President Anastasiades and the European Union heads, European central bank and the international monetary fund.

This plan has initiated by the finance ministers of the European zone and under this plan a financial meltdown will be allowed for the Mediterranean island by convoluting the state owned Popular bank of Cyprus that is also known as Laiki and it also includes shifting the deposits under the 100,000 Euros to the bank of Cyprus.

Freezing Cyprus assets

The deposits above the sum of 100,000 Euros that are not under the European Union law would be frozen and used to resolve the Laiki’s debts and recapitalizing Bank of Cyprus with the help of either deposit or equity conversion. As per a statement given by the Eurogroup chairman, the raid on the uninsured Laiki depositors is likely to generate 4.2 billion Euros. This will shut down Laiki bank and affect the job of thousands of people. According to the officials, senior bondholders of Laiki would be cleared out and account holders in Bank of Cyprus would have to contribute for that.

Cyprus government’s comment on the bailout

According to a spokesman of Cyprus government, no tax would be dictated on the deposits in Cypriot banks, though the large account holders would be hit in a far most manner. This would definitely affect the online traders trading in Forex market. An effect would also be seen on the traders that trade in binary options.

When the Cyprus government spokesman Christos Stylianides was asked about the losses that uninsured depositors had to face by the state radio, he told that he couldn’t specify it. He further added that the total loss is assessed to be around 30 percent but that is more of an arbitrary estimate.

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Tuesday, March 26th, 2013 europe, news

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