Cyprus: Eurogroup reaches last-minute agreement on Cyprus; worst-case scenario averted
Cyprus: Eurogroup reaches last-minute agreement on Cyprus; worst-case scenario averted
Emerging Markets Special Focus Reports
26 Μαρτίου 2013
A last-minute agreement on Cyprus was reached at the March 25 Eurogroup, hours before the expiration of an earlier ECB deadline to discontinue liquidity assistance to Cypriot banks via the Emergency Liquidity Assistance (ELA) facility. Cutting off liquidity assistance to ailing Cypriot banks would risk an immediate meltdown of the domestic banking system with severe consequences for the country’s euro membership status. The agreement came after a new round of dramatic negotiations between President Nikos Amnastasiades and the heads of the European Commission, the ECB and the IMF, during which the Cypriot President reportedly threatened to resign if pushed too far. Following the conclusion of the Eurogroup meeting, a Cyprus government spokesman said that the country averted a disorderly bankruptcy which would have led to Cyprus’s exit from the euro zone with unforeseeable consequences...
