This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.nytimes.com/2013/03/19/business/global/asian-markets-drop-on-latest-euro-concerns.html
The article has changed 14 times. There is an RSS feed of changes available.
| Version 6 | Version 7 |
|---|---|
| Cyprus Delays Vote on Bailout Plan | Cyprus Delays Vote on Bailout Plan |
| (35 minutes later) | |
| NICOSIA, Cyprus — Leaders in Cyprus and Brussels scrambled Monday to contain the fallout from an unprecedented effort to force ordinary bank depositors in this crisis-hit nation to pay for part of an international bailout, as stock markets faltered on concerns about the wider implications for Europe’s long-running debt crisis. | NICOSIA, Cyprus — Leaders in Cyprus and Brussels scrambled Monday to contain the fallout from an unprecedented effort to force ordinary bank depositors in this crisis-hit nation to pay for part of an international bailout, as stock markets faltered on concerns about the wider implications for Europe’s long-running debt crisis. |
| President Nicos Anastasiades was trying to compel policy makers in Brussels to soften demands for a tax to be assessed on Cypriot bank deposits, saying European Union leaders used “blackmail” to get him to agree to those conditions early Saturday in order to receive a bailout package worth 10 billion euros, or $13 billion. | President Nicos Anastasiades was trying to compel policy makers in Brussels to soften demands for a tax to be assessed on Cypriot bank deposits, saying European Union leaders used “blackmail” to get him to agree to those conditions early Saturday in order to receive a bailout package worth 10 billion euros, or $13 billion. |
| Cyprus, whose banking system is verging on collapse, is now the fifth nation in the 17-member euro union to seek financial assistance since the crisis broke out three years ago. | Cyprus, whose banking system is verging on collapse, is now the fifth nation in the 17-member euro union to seek financial assistance since the crisis broke out three years ago. |
| As anger in this country swelled against the measure, Mr. Anastasiades delayed an emergency vote parliamentary vote on the bailout plan until Tuesday, the second step in as many days. Faced with a lack of support from lawmakers, the vote could be delayed until as late as Friday. | As anger in this country swelled against the measure, Mr. Anastasiades delayed an emergency vote parliamentary vote on the bailout plan until Tuesday, the second step in as many days. Faced with a lack of support from lawmakers, the vote could be delayed until as late as Friday. |
| The government also said it would keep Cypriot banks shuttered until at least Thursday, well beyond a bank holiday that was supposed to end Monday, a move aimed at staving off a possible bank run. | |
| Cyprus’s banking association issued a statement calling on people to remain “calm,” saying it was ready to implement whatever measures were needed to protect the stability of the banking sector. The association said it would instruct banks to load automated teller machines with cash while banks remain closed. | Cyprus’s banking association issued a statement calling on people to remain “calm,” saying it was ready to implement whatever measures were needed to protect the stability of the banking sector. The association said it would instruct banks to load automated teller machines with cash while banks remain closed. |
| Financial markets stuttered on the news, with Asian stocks suffering the most, closing down about 2 percent. European market indexes were off about 1 percent by the end of the session, and Wall Street shares were less than 0.4 percent lower in afternoon trading. | Financial markets stuttered on the news, with Asian stocks suffering the most, closing down about 2 percent. European market indexes were off about 1 percent by the end of the session, and Wall Street shares were less than 0.4 percent lower in afternoon trading. |
| For the first time since the onset of the euro zone sovereign debt crisis and the bailouts of Greece, Portugal and Ireland, ordinary depositors — including those with insured accounts — were being called on to bear part of the cost, €5.8 billion. | For the first time since the onset of the euro zone sovereign debt crisis and the bailouts of Greece, Portugal and Ireland, ordinary depositors — including those with insured accounts — were being called on to bear part of the cost, €5.8 billion. |
| The previous bailouts have been financed by taxpayers, and the new direction raised fears that depositors in Spain or Italy, two countries that have struggled economically of late, might also take flight. | The previous bailouts have been financed by taxpayers, and the new direction raised fears that depositors in Spain or Italy, two countries that have struggled economically of late, might also take flight. |
| A crowd of protesters gathered in front of the presidential palace, shouting angrily at Mr. Anastasiades and inveighing against Germany and European leaders as he entered the building to meet with his cabinet. “Merkel, U stole our life savings,” read one banner tied to a bus stop. “EU, who is next, Spain or Italy?” read another. | A crowd of protesters gathered in front of the presidential palace, shouting angrily at Mr. Anastasiades and inveighing against Germany and European leaders as he entered the building to meet with his cabinet. “Merkel, U stole our life savings,” read one banner tied to a bus stop. “EU, who is next, Spain or Italy?” read another. |
| Miguel Arias Cañete, Spain’s agriculture minister, told journalists in Brussels on the sidelines of a European Union meeting that he saw no risk of contagion. Spain’s banking system had undergone “a very rigorous clean-up,” the minister said, and were now in a “magnificent situation” following their bailout last year. | Miguel Arias Cañete, Spain’s agriculture minister, told journalists in Brussels on the sidelines of a European Union meeting that he saw no risk of contagion. Spain’s banking system had undergone “a very rigorous clean-up,” the minister said, and were now in a “magnificent situation” following their bailout last year. |
| The group of finance ministers from the 17 countries using the euro were on standby Monday for a possible conference call later in the day to assess the outcome of discussions among party leaders in Cyprus. Jeroen Dijsselbloem, the president of the group, had declined Saturday to rule out taxes on depositors in countries beyond Cyprus, although he said such a measure was not being actively considered. | The group of finance ministers from the 17 countries using the euro were on standby Monday for a possible conference call later in the day to assess the outcome of discussions among party leaders in Cyprus. Jeroen Dijsselbloem, the president of the group, had declined Saturday to rule out taxes on depositors in countries beyond Cyprus, although he said such a measure was not being actively considered. |
| A key question for the finance ministers was expected to be whether any revised formula for the tax on deposits could still deliver the 5.8 billion euros agreed to in the bailout deal. The plan, a so-called bail-in, also includes junior bondholders in Cypriot banks, and that component of the deal still was expected to bring in about 1.4 billion euros. | A key question for the finance ministers was expected to be whether any revised formula for the tax on deposits could still deliver the 5.8 billion euros agreed to in the bailout deal. The plan, a so-called bail-in, also includes junior bondholders in Cypriot banks, and that component of the deal still was expected to bring in about 1.4 billion euros. |
| Joerg Asmussen, a member of the European Central Bank governing council, suggested that creditors may not object to a revision of the bailout terms. | Joerg Asmussen, a member of the European Central Bank governing council, suggested that creditors may not object to a revision of the bailout terms. |
| “It is up to the government alone to decide if it wants to change” some elements, he said on the sidelines of a Berlin conference Monday, according to Reuters. “The important thing is that the financialcontribution of 5.8 billion euros remains,” he said. | “It is up to the government alone to decide if it wants to change” some elements, he said on the sidelines of a Berlin conference Monday, according to Reuters. “The important thing is that the financialcontribution of 5.8 billion euros remains,” he said. |
| Russia’s support of the plan was also essential because of the large amount of Russian funds held by Cypriot banks. But President Vladimir Putin on Monday described the bailout plan as “unfair, unprofessional and dangerous,” the Interfax news agency quoted a Kremlin spokesman, Dmitry Peskov, as saying. | Russia’s support of the plan was also essential because of the large amount of Russian funds held by Cypriot banks. But President Vladimir Putin on Monday described the bailout plan as “unfair, unprofessional and dangerous,” the Interfax news agency quoted a Kremlin spokesman, Dmitry Peskov, as saying. |
| Foreign deposits made up 26.8 billion euros in deposits out of a total of 64.8 billion as of December, 15.4 billion euros of which were deposits from Russians in Cyprus, according to the Regional Banking Association of Russia. | Foreign deposits made up 26.8 billion euros in deposits out of a total of 64.8 billion as of December, 15.4 billion euros of which were deposits from Russians in Cyprus, according to the Regional Banking Association of Russia. |
| As financial markets absorbed the implications of the news, finger-pointing quickly ensued. In Berlin, the German finance minister, Wolfgang Schäuble, sought to deflect criticism for the damage to depositors, saying the “levy on deposits below 100,000 euros was not the creation of the German government,” according to Reuters. “If one reached another solution, we would not have the slightest problem.” | As financial markets absorbed the implications of the news, finger-pointing quickly ensued. In Berlin, the German finance minister, Wolfgang Schäuble, sought to deflect criticism for the damage to depositors, saying the “levy on deposits below 100,000 euros was not the creation of the German government,” according to Reuters. “If one reached another solution, we would not have the slightest problem.” |
| But Mr. Anastasiades denied that he refused the proposal to exempt deposits under 100,000 euros from the levy, according to the government spokesman, Christos Stylianides. | But Mr. Anastasiades denied that he refused the proposal to exempt deposits under 100,000 euros from the levy, according to the government spokesman, Christos Stylianides. |
| “The president struggled to prevent this outrageous development, which was imposed on Cyprus via blackmail from those who are today trying to justify their decisions,” Mr. Stylianides said. | “The president struggled to prevent this outrageous development, which was imposed on Cyprus via blackmail from those who are today trying to justify their decisions,” Mr. Stylianides said. |
| “They said that if the first 100,000 euros weren’t included in the levy, the target wouldn’t be reached,” he said. “Our creditors were asking that Cyprus close down the two big banks, transfer deposits to a healthy bank and liquidate of the rest of the deposits.” | “They said that if the first 100,000 euros weren’t included in the levy, the target wouldn’t be reached,” he said. “Our creditors were asking that Cyprus close down the two big banks, transfer deposits to a healthy bank and liquidate of the rest of the deposits.” |
| Mr. Stylianides added that the International Monetary Fund, during the negotiations, had even gone so far as to suggest a 40 percent haircut on certain deposits or to freeze deposits for up to five to 10 years. | Mr. Stylianides added that the International Monetary Fund, during the negotiations, had even gone so far as to suggest a 40 percent haircut on certain deposits or to freeze deposits for up to five to 10 years. |
| Analysts said the move to confiscate money from depositors had opened a Pandora’s box. | Analysts said the move to confiscate money from depositors had opened a Pandora’s box. |
| Moody’s Investors Service warned that the decision to impose losses on depositors was “a significant departure from past instances of support” by European officials. It “signals euro area policymakers’ willingness to risk triggering wider financial market disruptions in pursuit of other policy goals,” Moody’s said in a note. | Moody’s Investors Service warned that the decision to impose losses on depositors was “a significant departure from past instances of support” by European officials. It “signals euro area policymakers’ willingness to risk triggering wider financial market disruptions in pursuit of other policy goals,” Moody’s said in a note. |
| Analysts at DBS in Singapore wrote that financial markets were worried that the plan to force ordinary depositors to share the cost of the bailout “may send the wrong message on the safety of bank deposits in other E.U. nations, just when light appeared to be emerging at the end of the long tunnel for the peripheral nations.” | Analysts at DBS in Singapore wrote that financial markets were worried that the plan to force ordinary depositors to share the cost of the bailout “may send the wrong message on the safety of bank deposits in other E.U. nations, just when light appeared to be emerging at the end of the long tunnel for the peripheral nations.” |
| More broadly, analysts at Société Générale noted that the approach adopted over the Cyprus bailout also highlighted that there is still “no standard approach of tackling the euro debt crisis.” | More broadly, analysts at Société Générale noted that the approach adopted over the Cyprus bailout also highlighted that there is still “no standard approach of tackling the euro debt crisis.” |
| Other analysts and economists insisted that Cyprus’s problems were unique and said they expected the fallout from the trauma there to be limited. They noted that the Russian deposits in Cyprus’s banks, whose assets dwarf the island’s gross domestic product, raised fears in other euro zone nations that non-Cypriot taxpayers would be bailing out wealthy Russians, something that has not been a concern with other bailouts. | Other analysts and economists insisted that Cyprus’s problems were unique and said they expected the fallout from the trauma there to be limited. They noted that the Russian deposits in Cyprus’s banks, whose assets dwarf the island’s gross domestic product, raised fears in other euro zone nations that non-Cypriot taxpayers would be bailing out wealthy Russians, something that has not been a concern with other bailouts. |
| Goldman Sachs analysts said that, assuming Parliament approved a deal, “the direct ramifications from Cyprus will likely be contained,” thanks partly to the European Central Bank’s commitment to back up euro zone banks. | Goldman Sachs analysts said that, assuming Parliament approved a deal, “the direct ramifications from Cyprus will likely be contained,” thanks partly to the European Central Bank’s commitment to back up euro zone banks. |
| In afternoon trading in Europe, the Euro Stoxx 50, a benchmark for euro zone blue chips, was down 1.4 percent. In London, the FTSE 100 index dropped 0.6 percent. Yields on Spanish and Italian government bonds rose, as investors sought the perceived safety of German and other bonds. | In afternoon trading in Europe, the Euro Stoxx 50, a benchmark for euro zone blue chips, was down 1.4 percent. In London, the FTSE 100 index dropped 0.6 percent. Yields on Spanish and Italian government bonds rose, as investors sought the perceived safety of German and other bonds. |
| The euro fell against the dollar, dropping to $1.2951 from a close of $1.3074 on Friday. The decline took the currency to its weakest level since late last year. Cyprus’s markets were closed for a bank holiday, and officials have suggested they might extend the holiday for a second day Tuesday. | The euro fell against the dollar, dropping to $1.2951 from a close of $1.3074 on Friday. The decline took the currency to its weakest level since late last year. Cyprus’s markets were closed for a bank holiday, and officials have suggested they might extend the holiday for a second day Tuesday. |
| In Asian trading, the Nikkei 225-stock average tumbled 2.7 percent in Tokyo, while the Sydney benchmark Australia, the S.&P./ASX 200 index, closed 2.1 percent lower. The Hang Seng Index in Hong Kong fell 2 percent. | In Asian trading, the Nikkei 225-stock average tumbled 2.7 percent in Tokyo, while the Sydney benchmark Australia, the S.&P./ASX 200 index, closed 2.1 percent lower. The Hang Seng Index in Hong Kong fell 2 percent. |
| David Jolly contributed reporting from Paris, James Kanter from Brussels, Raphael Minder from Madrid, Bettina Wassener from Hong Kong and Andreas Riris from Nicosia. | David Jolly contributed reporting from Paris, James Kanter from Brussels, Raphael Minder from Madrid, Bettina Wassener from Hong Kong and Andreas Riris from Nicosia. |