Asian markets up after deal to save Cypriot economy
Hong Kong (AsiaNews / Agencies) - Asian stock markets have risen after the news of an agreement reached for a rescue plan for Cyprus. Investors have been reassured by the strengthening of the euro and fears that a Cypriot crisis could spread throughout the eurozone.
The Nikkei so far, is
up 1.9%, while Hong Kong is up 0.7 and Seoul by 1.3.
The Agreement between the Cypriot Government, European Union, the European Central Bank and
the International Monetary Fund was reached overnight. It ensures a 10 billion
euro loan to save the Cypriot banking system and avoid its exit from the euro
and subsequent bankruptcy.
The second largest bank in the country, Laiki, will be most affected and all
deposits over 100 thousand euro will be hit by a tax. Deposits under 100 thousand
will instead be saved.
The Laiki will be
divided into two parts, one "good" and one "bad." The good portion
will be absorbed by the leading Cypriot bank, the Bank of Cyprus.
According to Jeroen Dijsselbloem, president of the eurozone finance ministers,
the agreement is best for the people of Cyprus. It affects two banks (the Bank
of Cyprus and Laiki) and not the entire financial sector. Previously, the
island's parliament had rejected the idea of taxing
all bank deposits.
The agreement
reached gives breathing space to small savers - who would have been taxed at
6.75% - but opens a huge dispute with the big repositories in Cyprus, which
include many Russians. The percentage of this tax has yet to be decided. But
the International Monetary Fund has insisted that the tax is not subjected to a
Parliament vote.
Cypriot banks have been closed for the entire period of these talks and it is
not known when they will be reopened. As of yesterday, the Bank of Cyprus has
reduced the withdrawal limit from ATMs to 120 euros. The Laiki lowered its
limit to 100 euros.
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