The Cyprus crisis

All we can do is pray: Cyprus teeters on the brink of financial collapse as bank restricts customers to 100-euro withdrawals and president flies to Brussels to beg for help

• World Bank chief: Meltdown could be contagious and infect other nations
• Thousands of protesters voice anger as Cyprus nears deadline tomorrow
• Nicosia 'agrees with lenders on 20% levy on BoC deposits over €100,000'
• Cypriot government: 'Negotiations are very delicate and deadlines tight'
• EU says island must raise €5.8bn on its own before it gets €10bn bailout
• Cypriot President Nicos Anastasiades due in Brussels for urgent talks
• Russia could retaliate to crisis by punishing EU, ex-Kremlin adviser says

 Saying their prayers: Cypriots attend a Sunday service at Saint-Mamas Orthodox church in Nicosia today

Daily Mail,

24 March, 2013

Cypriots gathered at Orthodox churches around the country today to pray for their crisis-hit island.

Worried shoppers were panic buying at supermarkets in Cyprus today as the World Bank warned a meltdown on the island could be contagious and infect the economies of other vulnerable nations.

Nicosia reportedly agreed with its lenders on a 20 per cent levy on bank deposits over €100,000 at its largest lender, Bank of Cyprus, and 4 per cent on deposits above the same level at other banks.

And the central bank in Cyprus imposed a €100 per day withdrawal limit at cash machines for all local banks today to avert a run on lenders, lasting from 13:00 today (11:00 GMT) until at least Tuesday.

President Nicos Anastasiades flew to Brussels, Belgium, for talks as the island sought an 11th-hour reprieve from disaster, with a bailout from the EU and its place in the euro hanging in the balance.

World Bank managing director Sri Mulyani Indrawati said: ‘The first impact on this global environment from this Europe situation comes from perception because it is psychological.

‘And that is contagious because it is coming from the capital market, from the equity market, from the financial sector. We have to watch very carefully what is happening in Cyprus.

‘The global economy cannot afford to have more volatility again. That is why policymakers need to do the right thing in a very quick way so as to reduce the volatility and the uncertainty.’

Her remarks contrast with those of German politicians, who have suggested contagion from Cyprus would be limited. Europe's financial markets have traded in relative calm since the crisis flared up.

Meanwhile French Finance Minister Pierre Moscovici told Canal Plus: ‘To all those who say that we are strangling an entire people... Cyprus is a casino economy that was on the brink of bankruptcy.’

Supermarket supplies were said to be running low in some areas of Cyprus as the EU's economic affairs chief said there were now ‘only hard choices left’ for the latest casualty of the eurozone crisis.

Panic buying: Crowds flock to supermarkets for fear of lack of products due to supply shortages in Nicosia

Big day: Cypriot President Nicos Anastasiades pictured in his car after arriving at an airport in Brussels today

Facing a deadline tomorrow to avert a collapse of the Cypriot banking system, talks in Nicosia to seal a bailout from the EU and International Monetary Fund broke up late last night without result.

‘Negotiations are at a very delicate phase,’ a Cypriot government spokesman said. ‘The situation is very difficult and the deadlines are very tight.’

Cyprus's overgrown banking sector has been crippled by exposure to crisis-hit Greece, and the EU said the island must raise €5.8billion on its own before it can receive a €10billion bailout.

Without a deal tomorrow, the European Central Bank said it will cut off emergency funds to Cypriot banks, spelling certain collapse and potentially pushing the country out of the euro zone.

President Anastasiades, barely a month in the job and wrestling with Cyprus's worst crisis since a 1974 invasion by Turkish forces, is expected to meet heads of the EU, the ECB and IMF today.

Demonstration: Thousands of bank employees protest outside the Ministry of Finance in Cyprus yesterday

Scrambling to find the funds, officials said Cyprus had conceded to a one-time levy on bank deposits over €100,000. Just five days ago lawmakers angrily threw out a similar proposal as ‘bank robbery’.

Finance Minister Michael Sarris spoke of ‘significant progress’ in talks. The EU's Economic Affairs Commissioner, Olli Rehn, said progress was being made, but warned of tough times ahead.

‘Unfortunately, the events of recent days have led to a situation where there are no longer any optimal solutions available,’ he said in a statement. ‘Today, there are only hard choices left.’

In a stunning vote on Tuesday, Cyprus's 56-seat parliament rejected a levy on depositors, big and small on Tuesday, and Sarris spent three fruitless days in Moscow trying to win help from Russia.

Their citizens have billions of euros at stake in Cypriot banks. Rebuffed by the Kremlin, Sarris said the levy was back ‘on the table’.

Bailout Closing: Cyprus & lenders agree on taxing deposits

Cyprus and international lenders have managed to strike a long-awaited agreement on taxing bank deposits of over 100-thousand euros held with the country's biggest bank. Customers who keep large sums of money in other banks will also be forced to sacrifice part of their savings to the country's ailing economy.

Cyprus: 'people are very gloomy here'

As the Cypriot leader meets with eurozone finance ministers for last-ditch talks to secure a 10bn bailout, the Telegraph's Nick Squires in Nicosia says that the residents are "very gloomy" about their future.

The Cypriot President Nicos Anastasiades and other ministers arrived in Brussels mid-morning for meetings this afternoon with senior EU leaders, including Herman Van Rompuy, the European Council president, and Christine Lagarde, the IMF's managing director.The leaders of the debt-laden island will then meet with eurozone finance ministers for last-ditch talks to secure a €10bn (£8.5bn) to save Cyprus from bankruptcy. The negotiations are expected to go to the wire.

The eurozone and IMF are pushing Cyprus to hammer its largest bank as part of radical measures to raise up to €7bn as part of its bail-out deal or face going bust on Tuesday.

Under the current plan, the Bank of Cyprus will have deposits of more than €100,000 hit by a 20pc levy, while other banks will be hit for 4pc, in a desperate attempt to stave off financial meltdown.

The plan will be put to Europe's finance ministers in Brussels for approval this evening.

The European Central Bank has set a deadline of Monday night to remove support from the island's banks.

If Cyprus fails to agree, it faces economic collapse on Tuesday and could become the first country to depart the eurozone altogether.

The Telegraph's Nick Squires, who is in the Cypriot capital of Nicosia, says that the people there "are very gloomy".

"They fear that they will lose their savings but they also say that Cyprus' credibility and trustworthiness as a financial centre has been completely shattered."

People fear for their jobs and young Cypriots say that they might move to the UK to look for work, Nick Squires says.

The people of Cyprus were "very down-hearted," he added.