European policy makers are weighing how far to push Cyprus after lawmakers in the Mediterranean nation rejected an unprecedented levy on bank deposits, throwing into limbo a rescue package designed to keep it in the euro.
Stocks and the euro gained as investors speculated that the European Central Bank, whose Governing Council meets today in Frankfurt, will continue to support the country’s banks. Luxembourg Finance Minister Luc Frieden called for the 17 euro finance ministers to reconvene as soon as possible to forge a new bailout.
“This is not a good result -- neither for Cyprus, nor for the euro zone, and we have to look together for alternatives to the negotiated package,” Frieden said yesterday in a phone interview from Frankfurt. “What matters now is to undertake all necessary measures to ensure the stability of the euro zone.”
Cyprus’s rejection came after days of recrimination sparked by European plans to force depositors in the country to shoulder part of the bailout with their savings. Cypriot President Nicos Anastasiades returned from marathon talks in Brussels on March 16 saying the alternative would be the “indescribable misery” of the ECB cutting off funding to one of its banks.
Read more: Europe Weighs Cyprus’s Fate After Lawmakers Reject Deal - Bloomberg
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