Cyprus in attempt to save its economy

The political leaders of Cyprus are trying to make a last minute deal in order to save the economy of the country. According to the information presented by the European Central Bank, it will keep the emergency aid planned for the banks in Cyprus until Monday, however after that it will cut them off unless the local government does not issue a rescue program. Thus, the bailout deal should be signed soon, as the Emergency Liquidity Assistance offered by the European Central Bank will be valid only until the beginning of next week. After that deadline, the assistance will be offered only if the solvency of the banks is secured.

According to the new plan that the government of Cyprus wants to impose, there still will be a 2 % one-time tax on all deposits up to 100 000 Euro and 5 % one-time tax on the other deposits above the named threshold. This new bailout plan came as the finance minister of Cyprus went to Russia in search of additional help. He took this step as many of the wealthiest people in Russia hold big deposits in the banks of Cyprus. Meanwhile, the banks in the country will remain closed until the end of the week, however the authorities have ordered all ATM machines to be regularly filled with cash.

The European Commission, the European Central Bank and the International Monetary Fund, as well as other European officials hope that Cyprus will soon reach a decision and get a financial lifeline, otherwise the damage to the economy of the country will be enormous.