The parliament in Cyprus has approved a series of measures demanded by the European Union, but hasn’t passed the most sensitive part: the bank levy.
Lawmakers did approve measures to prevent withdrawals of large funds, but still haven’t come around to the issue that many Europeans are watching: a tax on bank accounts.
Among the measures approved are: restructuring of the banking sector, nationalizing pension funds and other assets. They also approved capital controls in order to prevent a capital flight out of the island.
According to recent report, a levy of 15% could be issued on accounts over 100K euros, which are officially uninsured in the EU. On the other hand, there are reports that the original 6.7% levy on smaller accounts and 9.9% on 100K+ accounts is still on the table.
The mere suggestion of taxing small accounts, contrary to what was known so far, is very troubling for many EU citizens, especially in countries were banks have seen troubles, such as Spain.
Cypriot lawmakers are pressured from Russia, which doesn’t want to see its bigger investors hurt, from the EU that wants a quick approval, and from its own citizens that don’t want to lose the money they saved in the banks.
The March 25th deadline of the ECB looms, and this may result in a euro exit.
