Europe Weighs Cyprus’s Fate

After legislators reject bank levy, Merkel signals willingness to engage with Cyprus.

European policy makers weighed how far to push Cyprus after lawmakers in the Mediterranean nation rejected an unprecedented levy on bank deposits, throwing into limbo a rescue package designed to keep it in the euro.

Stocks and the euro gained as investors speculated that the European Central Bank, whose Governing Council meets today in Frankfurt, will continue to support the country’s banks until next week. Chancellor Angela Merkel, saying she “regrets” the Cypriot parliament’s decision, signaled a willingness to engage with Cyprus as long as its banks contribute to a bailout.

Russia Talks

Russia and Cyprus are in the midst of loan discussions, Sarris said after meeting his counterpart, Finance Minister Anton Siluanov. The talks included “things beyond that,” Sarris said, when asked about extending the term of an existing 2.5 billion-euro loan from Russia or a new credit.

‘Plan B’

Anastasiades met with political party leaders in Nicosia today as Cyprus’s banks and stock exchange remained closed. The parties have put together technical teams who will meet at the Central Bank of Cyprus to discuss a “plan B” with central bank officials on how to raise the 5.8 billion euros needed, Christos Stylianides, a government spokesman, said.

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