Pressed for time and unable to charge small depositors, Cypriot leaders and international creditors worked out an alternative proposal. The nation’s second-largest bank would be closed and viable assets would be transferred to the nation’s largest bank. Deposits of more than 100,000 euros will be charged as much as 60 percent, and senior bondholders will also likely take losses. All in all, still highly shocking and economically disruptive.
Throughout this, Cypriot banks remained closed and tight capital controls were put in place to prevent a bank run and to ensure that taxable deposits remained in Cyprus. The nation’s government has said that the controls could remain in effect for as long as a month. The deal struck on Tuesday unfroze about 10 percent of the remaining 40 percent of unsecured deposits, which incurred losses related the bailout.
With this said and done, Cyprus is looking to ease the other terms of its bailout package. According to Bloomberg, government spokesman Christos Stylianides said that Cyprus has until 2017 to pay back the 10 billion euros and secure a primary budget surplus, which excludes interest, and is seeking an additional year for repayment.