22 March 2013, 02:48

Cyprus: vote on restructuring banking sector postponed until Friday

In Cyprus, a vote on restructuring the country’s ailing banking sector has been postponed until Friday, local television reports.

The head of the country’s Central Bank, Panikos Dimitriadis, had earlier announced the start of the move to restructure the country’s banks, warning that the process would  inevitably result in certain financial losses for account holders.  On Thursday finance ministers of the eurozone countries urged Nicosia to fully ensure bank accounts under 100,000 euros.

Nicosia has until Monday to outline and present to its international creditors a national anti-crisis plan for raising almost 6 billion euros in order to get a 10 billion euro bailout from its international creditors.

Cyprus to impose capital controls on banks

The Cypriot government submitted a bill to parliament on Thursday giving the finance minister or central bank governor the right to impose capital controls on banks.

"The purpose of this law is, in case of an emergency for purposes of public order or security, to assign powers to the Finance Minister, or the Central Bank governor to take and impose temporary restrictive measures, including restrictions on capital controls," said the bill. 

Cyprus bombarded by criticism

Integration processes in Russia have become the key topic of the international conference “Russia and the European Union: partnership and its potential” that is currently underway in Moscow. European leaders have also discussed the situation in Cyprus, Russia-EU visa-free travel, and the euro crisis.

Starting with the Russian head of state, almost all of the high officials at the conference critiqued the Cyprus plan. Russian PM Dmitri Medvedev called the Cyprus strategy absurd and suggested discussing all future plans regarding Cyprus with Russia.

"Because of a crisis of trust the system of financial mediation provided in particular by investors and organizations of the G20 member states, has stopped working. The European countries have done a lot to overcome this crisis and we highly value their efforts. Taking into account the recommendations of the Financial Stability Board, relevant proposals on the development of national systems of deposit insurance have been accepted. In view of this, the Cyprus plan currently under discussion appears completely absurd. I think this is reason for serious thinking on the part of everyone. In any case, all future plans regarding Cyprus could be discussed with the participation of all parties involved, including Russia".

Another important topic under discussion was the establishment of a visa-free regime between Russia and the EU. The Russian PM voiced his regrets that no agreement has been reached on the issue so far. Ex German Defense Minister Volker Ruhe expressed his support of visa-free travel between Russian and the EU but the European Union is not in a hurry to scrap the Russia-EU visa regime. However, the question of Eurasian integration often brought up by Russia has found support in the EU. President of the European Commission Jose Manuel Barroso supports the idea.

Russia-EU conference meetings will continue on Friday.

Voice of Russia, TASS, Reuters

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