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Ahead of the afternoon parliamentary vote on the hugely unpopular measure, negotiators were seeking to soften the blow on small-time depositors, who have been stunned by the announcement that their savings will be skimmed.
As a condition for a desperately-needed 10-billion-euro bailout for Cyprus, fellow eurozone countries and international creditors Saturday imposed a levy on all deposits in the island’s banks.
Deposits of more than 100 000 euros will be hit with a 9,9 percent charge, while under that threshold the levy drops to 6,75 percent. The proposal must still be passed by parliament.
Private television channel Mega reported that negotiators were seeking to cut the rate to three percent on deposits under 100 000 euros, and raise it above 10 percent on deposits more than that amount in a way that would still see the overall sum raised remain at 5,8 billion euros.
Local Sigmalive news website said a teleconference with the eurogroup was to take place yesterday afternoon to discuss the new proposals.
As Cypriots voiced dismay and anger at the levy, global markets were jolted by concerns that events on the Mediterranean island could reignite the eurozone debt crisis and hit confidence in other troubled countries such as Spain and Italy.
Europe’s main stock markets tumbled by more than 1,0 percent in early deals as investors reacted to news of the Cyprus bailout deal. Asian equities also fell heavily in earlier trade.
“If European policymakers were looking for a way to undermine the public trust that underpins the foundation of any banking system they could not have done a better job,” said CMC Markets analyst Michael Hewson.
“The feeling is that the euro crisis could be back and that you could see full-on contagion, that’s why you’re seeing the market reaction today,” Shane Oliver, chief economist at AMP Capital in Sydney, told Dow Jones Newswires.
In Asia, the euro dived, with the currency sinking in afternoon Tokyo trade to 121,77 yen, from 124,61 yen in late New York trade on Friday, and to US$1,2902 from US$1,3075.
News of the controversial tax also drew a sharp response from Russian President Vladimir Putin, who called it “unfair, unprofessional and dangerous”.
Several analysts said the measure was meant to make sure that Brussels did not spend billions propping up the at-times ill-gotten gains of rich Russians, who are widely believed to have exploited Cyprus’s reputation as a tax haven and as being soft on “dirty money”. – AFP.
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