Cyprus parliament rejects bank deposit levy
Polya Lesova, MarketWatch
Fate of sovereign bailout for Cyprus unclear after parliament vote
NEW YORK (MarketWatch) — The Cypriot parliament on Tuesday rejected a proposed financial bailout that would have included an unprecedented and controversial levy on bank deposits, throwing the country’s financial future into doubt and forcing the government and its creditors back to the negotiating table.
In Nicosia, 36 parliament members voted against the controversial tax on Tuesday evening, while 19 members from the ruling party of President Nicos Anastasiades abstained, according to media reports. No one voted in favor of the proposal, which had sparked widespread protests in Cyprus and rattled global financial markets for two days. Read The Wall Street Journal’s story on the rejection of the tax.
It’s unclear what happens next in Cyprus, but the nation’s sovereign bailout is now in doubt. The next days may potentially bring more talks between Cyprus and its euro-zone partners, or alternatively Cyprus may seek financial help from Russia.
If Cyprus ends up on the brink of default, the situation could deteriorate quickly — in a worst-case scenario leading to the nation’s exit from the 17-nation euro zone and threatening the future of the currency bloc.
The European Central Bank said it would provide liquidity to Cyprus as needed within existing rules, according to Bloomberg News Tuesday.
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