Cyprus Levy Threatens to Derail Euro-Area Bailout

Charge on bank accounts still must be ratified by legislature.

Europe braced for renewed turmoil as outrage in Cyprus over an unprecedented levy on bank deposits threatened to derail the nation’s bailout. European shares and the euro tumbled.

Cypriot President Nicos Anastasiades, who bowed to demands by euro-area finance ministers to raise 5.8 billion euros ($7.6 billion) by taking a piece of every bank account in Cyprus, appealed to lawmakers in Nicosia to ratify the levy today. The vote was delayed from yesterday over the opposition of the European Central Bank amid talks to restructure the tax.

Depositor Swap

In a bid to ease a run on banks, depositors who keep their account for two years will receive securities linked to future revenue from the country’s gas reserves, the president said.

Smaller Bailout

Euro finance ministers reached agreement early on March 16 after 10 hours of talks. Cypriots awoke to find bank transfers already frozen as the government prepared to impose the tax before banks reopen tomorrow. Today’s bank holiday in Cyprus may be extended by at least one day, state-run broadcaster CYBC reported, without saying where it got the information.

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