Brussels - Nicosia and international creditors were discussing Monday revisions to an unprecedented levy on bank accounts agreed in a bailout for Cyprus which has sparked market turmoil and fresh fears of debt crisis contagion, an EU source said.
“The Cypriots are debating, finalising a new proposal,” said the source who asked not to be named.
“We really want to reduce the impact” on smaller savers but the “idea is still to achieve the same objective, (of raising) 5.8
billion euros,” the source said.
The EU source said the discussions turned on setting three levels - for those accounts under 100,000 euros, less than 500,000 euros and then more than 500,000 euros.
In the bailout accord agreed in the early hours Saturday with the EU, the International Monetary Fund and the European Central Bank, Cyprus accepted a levy of 6.75 percent on accounts up to 100,000 euros and 9.9 percent thereafter.
The aim was to limit the overall size of the bailout to about 10 billion euros, rather than the 17 billion euros originally mooted, but the move caused outrage in Cyprus, forcing the newly-elected government onto the defensive as it tries to get parliament approval Monday for the rescue package.
The accord also dealt a serious blow to global confidence by stoking fears that other countries in difficulty might opt for the same course of action.
On the financial markets, which have risen strongly in recent months on hopes the worst of the debt crisis was over, the banks were hit badly Monday as investors looked for safety first.
“We really want reduce the impact for the tranche of less than 100,000 euros,” the EU source said, adding: “There is nothing definitive now.”
“The idea is to have the proposal today and in that case the Eurogroup (may discuss) it by teleconference,” the official said.
In Cyprus, President Nico Anastasiades was facing a vote in parliament in the afternoon. Private television channel Mega said negotiators were looking at a 3.0 percent levy on deposits under 100,000 euros and above 10 percent for the rest. - Sapa-AFP