The bank holiday in Cyprus that was supposed to end Thursday has been extended again which has done little to ease the anxiety of Cypriots desperate to withdraw their savings for fear of having them taxed. Unrest has been breaking out around banks with people protesting for “dignity” and voicing opposition against any plans to tax deposits to pay for a bailout.
All this while a Plan B is being worked out behind the scenes – Plan A having already been rejected by the Cypriot Parliament.
Cyprus was on Thursday fine-tuning a “Plan B” aimed at securing a eurozone bailout that the European Central Bank warned should be adopted by the weekend to avoid a banking meltdown on the debt-hit island.
As President Nicos Anastasiades huddled with political party leaders over the revised plan, Eurogroup head Jeroen Dijsselbloem warned in Brussels the crisis poses a “systemic risk” that threatens to ricochet through the eurozone.
Everyone feel better?
The contagion effect has sent markets down across the world as the crisis has also brought Russia and the European Union into conflict with the Russian Prime Minister calling the EU’s plan “absurd” and demanding that Russia be involved in any deal.
The latest plan seems to revolve around the concept of shrinking Cyprus’ financial system by closing two of the country’s largest banks while also freezing assets for uninsured depositors. It is unclear if this plan would be any more acceptable than other plans offered. The deadline for a” Plan B” in this very fluid situation is shaping up to be before markets open on Monday. It’s going to be a long weekend.