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March 24, 2013

Cyprus in Emergency Talks with Lenders to Avoid Bank Collapse

by VOA News

Cypriot leaders are holding emergency talks with global lenders in a last-ditch effort to reach a deal on the island's financial crisis.
 
If no plan is put together by Monday, Cypriot banks could collapse, plunging the country into bankruptcy and possibly out of the eurozone, threatening the currency's stability. 
 
Cypriot President Nicos Anastasiades flew to Brussels Sunday to meet with officials from the European Union, European Central Bank, and International Monetary Fund.
 
Cyprus failed twice last week to raise the funds needed to secure a $13 billion emergency loan.  The Cypriot parliament rejected plans for a one-time levy on bank deposits.  Russia also turned down Cyprus' appeal for help.
 
Economist Hung Tran with the Institute of International Finance tells VOA the fact that Cypriots waited until the last minute to seek a deal inspires little confidence from its lenders. 
 
"After all, the problem in Cyprus has been around for many months, and in fact the Cypriot government started discussions worth the troika 6-7 months ago.  To allow things to be decided in a rush at the very last minute doesn't inspire confidence in the crisis resolution capability that we have seen in the euro area," he said.