Cyprus Crisis

Topics: Euro, European Union, Cyprus Pages: 1 (283 words) Published: April 10, 2013
Alexandra Palaeva
BUS 211 91
Article #5

Cyprus Crisis

European Union bailout Cyprus with 10 billion euro on Monday. Part of agreement was that Cyprus second largest bank, Popular Bank, would be closed. As well as new tax plan for Bank of Cyprus. All banks have been shut since March 16th, they’re planning to reopen them on Wednesday, March 28th. Over the weekend, there was a withdrawal limit of 100 euro on ATM, but it didn't stop from emptying them. Part of new agreement includes that any assets more than 100,000 euros is being frozen. Right now its unknown what will happen to those assets, but there is a chance that they might lose everything at Popular Bank, and be forced to swap %30 to %40 of their deposits for shares at Bank of Cyprus. Chairman and directors of the Bank of Cyprus were offered to resign. Cyprus promised to protect any deposits less than 100,000 euros. New heavy taxes will apply on deposits more 100,000 euros. According to the data from Bank of Cyprus, there was 68 billion euros on the end of February in Cyprus. Around 1/3 of all deposits comes from foreign investors, most of them (18 billion euros) belongs to Russians. In January 2012, Cyprus got an emergency loan of 2,6 billion euros from Russia, and it was expected that they would be able to fund themselves again in begging of 2013. Right now, Russians looking for alternatives on where to keep their money, some source stating that the new destination will be Hong Kong. As a result of Cyprus crisis, the euro fell, as did socks around the globe including U.S.
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