Cyprus has averted a disorderly default and secured the future of the younger generations, Finance Minister Michalis Sarris said on Monday.
Speaking at a press conference in Brussels after the eurogroup approved a bailout deal on Cyprus, Sarris that a long period of uncertainty and insecurity for the Cyprus economy has ended. “I believe our country has avoided disorderly default and secure the future of the younger generations,” he said.
Sarris said Presiden Anastasiades had secured the best possible results in difficult negotiations, adding that the Eurogroup decision ends the uncertainty and sets the basis for a new, hope-filled beginning.
“Effectively we did not just win a battle but I believe we have avoided the visible danger of a catastrophic exit from the eurozone,” he said.
The government and the people, despite the difficulties ahead are determined to handle the issue well and achieve a speedy economic recovery, he added.
The aim now was for macroeconomic activity, with a restructured banking sector, fiscal discipline and structural change, he said.
Sarris warned that there would be sacrifices ahead and difficult times, but the economy has the capacity to recover so as to boost social cohesion.
The Finance Minister said that a significant number of depositors, including companies and private individuals has deposits below 100,000 euros but acknowledged that a significant number was above that figure and it would require a few days to establish the sums needed to convert deposits into capital.
Asked when local banks, which have been closed all week, would reopen, he said the exact date would be decided in consultation with Cyprus’ EU partners, but the aim was for this to occur the soonest possible.
The minister confirmed that the 9.2b euros in liquidity given to the Cyprus Popular Bank from the ELA will be transferred to the Bank of Cyprus, but added that the ECB has an obligation to help the island’s biggest lender by supplying it with liquidity.
He added that under the agreement, the adaptation of the ratio of capital to the size of the bank will be gradual and remain at 9%, giving it some time to deal with the problem.
Bank of Cyprus will shoulder a burden of the Cyprus economy that needed to go somewhere and which we must pay back in a reasonable time frame so that the bank can unimpeded play the role expected of it.
Asked about the participation of provident funds in the Bank of Cyprus, he said that deposits irrespective of where they come from will be converted into shares, so that the new owners of the bank will effectively be its current large depositors.

Cyprus Weekly

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