Cyprus & World News

Only deposits up to €100,000 guaranteed in Cyprus

06 March, 2014

The Council of the EU made clear that deposits in Cyprus are guaranteed only if not exceed €100,000, excluding any support from European institutions for providing further guarantees from Cyprus Government, in a written response to the to the Cypriot MEP Antigoni Papadopoulou on February 24, 2014

In its response the Council says that, in accordance with the provisional agreement reached on 17 December 2013, between the Council, the European Commission, the European Parliament, Cyprus and the other Member States of the EU it is required to ensure that the Deposit Guarantee Schemes (DGS) can make payments to eligible depositors when deposits become unavailable.

The reply further states that DGS have the obligation to collect any available financial resources through contributions from its members at least once a year and that only those deposits that are not excluded by the Directive are eligible and may be protected.

Papadopoulou had asked whether the Council believes that it would be feasible and beneficial to offer government guarantees for all deposits in Cypriot banks, in order to restore confidence and reduce the risk of massive deposits outflow in case of lifting capital controls. She also asked if in that case, could be a commitment on the part of relevant European institutions that will provide the necessary liquidity.

Capital controls on transactions in Cyprus have been imposed following an agreement during the Euro Area Finance Ministers meeting on March 25, 2013 on a €10 billion bailout for Cyprus, featuring an unprecedented haircut on uninsured deposits in a bid to replenish the depleted capital of the island`s two largest banks which sought state support following massive losses due to the haircut of the Greek sovereign debt.