Cypriot politicians were unable to enjoy the Saturday Sun in the troubled mediterranean Island as the country suffers from a truly troubled economic state. The EU gave Cyprus an ultimatum, ‘raise Euros 5 billion and only then will we support you with a Euros 10 billion package’ by Monday.
The government, locked behind closed doors for the last week has decided on an interim solution that might just save the once offshore tax haven state to keep its position as a EU member and be part of the single currency pact.
And the verdict is….
A massive 20% tax on savers with deposits over 100,000 euros at the Bank of Cyprus.
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A formidable 4% tax on deposits over 100,000 euros for investors with funds at other banks.
Brussels has given Cyprus until Monday to raise the funds, EU leaders will be holding talks tomorrow (Sunday) to measure up the ‘solution’ Cyprus managed to muddle up today.
The Euro closed at 1.2989 against the Green back on Friday.
Earlier in the week, Cyprus’s finance minister tried his luck with friends in Moscow, however the minister returned empty-handed.
Ratings agency Moody’s added salt to the wounds of Cyprus by downgrading the deposit and senior unsecured debt ratings of; Bank of Cyprus, Cyprus Popular Bank and Hellenic Bank, the banks suffered relegation from Caa2 to Caa3.
Cyprus has become an alternative jurisdiction for financial services firms looking to gain exposure to Europe. Several derivatives brokers set up shop under CYSEC, Cyprus Forex and CFD brokers have created their own FX eco-system in the region. Cypriot banks have been struggling on the back of the Greek debt crisis.