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"I am delighted that we managed to hammer out a deal for Cyprus overnight and thus prevent the country becoming insolvent", said Angela Merkel. "The deal spreads the financial burden fairly", she added. "Banks must accept responsibility for their own affairs." Cyprus can count on the solidarity of the European states, she continued. They will continue to help Cyprus on its difficult path with guarantees over the years to come. "But Cyprus must of course do its bit too, in the form of privatisation, structural reform and raising tax rates which have been very, very low to date."
Cyprus is to get its debt down to a sustainable level of 100 per cent of the country’s gross domestic product (GDP) by 2020. For this, the volume of the EU bailout had to be limited to €10 billion. The remaining shortfall must be found by the Cypriot government, meaning that investors and the banks’ creditors must do their bit. This regulation is far better and far clearer than last week’s compromise, said Wolfgang Schäuble. "It is, nevertheless, going to painful for Cyprus.”
All deposits with the Bank of Cyprus worth more than €100,000 will be frozen, he continued, with deposits becoming liable or risk capital. The Bank of Cyprus is to achieve an equity ratio of nine per cent. It will be up to the troika to hammer out the details of what percentage of deposits will be involved. It could be "a good 50 per cent", he stated.
"I have already informed the heads of the parliamentary groups in the German Bundestag and discussed with them the involvement of the Bundestag", said Wolfgang Schäuble. The pertinent bodies of the parliamentary groups will decide whether or not the German Bundestag will be dealing with Cyprus bailout this week. The Federal Finance Minister expects a vote on the bailout in the third week of April. By then the details of the programme ought to be available. The Eurogroup has asked the troika, composed of the European Central Bank, the International Monetary Fund and the European Commission, to work out the details of the programme by early April with Cyprus in the form of a memorandum of understanding. This will then have to be approved by the German Bundestag.