Entries in Cyprus (5)


Bank of Cyprus Depositors Could Lose More Money Than Expected

Hemera/Thinkstock(NICOSIA, Cyprus) -- Wealthy depositors in the Bank of Cyprus could lose even more of their savings than initially expected.

According to BBC News, depositors with over 100,000 euros could lose as much as 60 percent of their money in order to pay for the bailout.

According to a statement from the bank, accounts that are over the 100,000 euro threshold will have 37.5 percent of their money converted into bank shares. Additionally, depositors could lose up to 22.5 percent more, depending on what experts deem necessary to support the bank's reserves.

The remaining 40 percent would continue to accrue interest, however the interest would only be paid if the bank "performs well," says BBC News.

The BBC report also states that depositors at Laiki -- Cyprus' second largest bank -- could face even larger losses, though no details have yet been released. Laiki is expected to eventually be absorbed by the Bank of Cyprus.

European and Cypriot government leaders reached a bailout deal this past week that averted a bank collapse. The $13 billion bailout calls for shrinking the banking system.

Banks in Cyprus reopened on Thursday with strict limits on transactions on withdrawals and a ban on cashing checks. Long lines of citizens waited to access their money on Thursday, but by Friday the lines were significantly shorter.

Copyright 2013 ABC News Radio


Bailout Plan Could Avert Economic Collapse in Cyprus

Hemera/Thinkstock(NEW YORK) -- Cyprus has seemingly avoided economic disaster by agreeing late Sunday to a bailout plan which will provide the island nation with a bailout of approximately $13 billion.

Time was of the essence, as failing to reach an agreement could have spelled the collapse of Cyprus' banking system, leading next to bankruptcy, with a potential ripple effect throughout the entire European continent.

Last week, the Cypriot parliament roundly rejected the first proposal from the European Union and International Monetary Fund, which would have tacked surcharges of up to ten percent on virtually all bank accounts.

The new deal calls for shrinking the banking system, in fact, the Cyprus Popular Bank will be shut down and viable assets taken over by the Bank of Cyprus.

To help pay for the bailout, bank depositors with more than 100,000 euros will endure losses while those under that amount will be protected.

If lawmakers approve the plan, it will mean immediate pain for Cypriots and the likely end of their country as an offshore tax haven.

Copyright 2013 ABC News Radio


Cyprus Crisis Boosting Value of Bitcoins

Luis M Molina/Getty Images(NEW YORK) -- Currency markets are keeping close track of Cyprus' banking crisis and are braced for possible repercussions, but one currency has thrived in the chaos and zoomed in value -- Bitcoins.

A Bitcoin is a digital currency that is traded electronically and does not need government backing. Despite its name, there is no coin to put in your pocket.

Two weeks ago, one Bitcoin was worth $40, then a record high.

Today, a Bitcoin is worth $72, largely because of "incremental interest" from euro and Russian ruble holders who are terrified by the situation in Cyprus, said Nicholas Colas, chief market strategist at ConvergEx Group, a financial technology company in Manhattan.

"The best-performing currency year-to-date has no home country, no central banker and no physical scrip," Colas said.

The Bitcoin is "clearly having a breakthrough moment here, and a deeply surprising one given its novelty and nascent infrastructure," he said.

The Bitcoin reportedly was invented by a man who called himself Satoshi Nakamoto, and who may -- or may not -- have been a 23-year-old graduate student in cryptography at Trinity College in Dublin. He wanted people to be able to exchange money electronically and securely without a third party's involvement.

Although there are no physical coins, Walmart sells Bitcoin gift cards, and WordPress and Reddit both take payments in Bitcoin.

Charlie Shrem, the CEO of BitInstant, a payment processor for Bitcoin exchanges and other merchants, thinks the Bitcoin is the wave of the future.

"Let's say you have someone in Cyprus who badly needs money," Shrem said. "How are you going to get that person money? There's not enough cash going around. Bitcoin can and will be used as a barter, or maybe a collateral tool."

He believes that people will first use Bitcoin "for its better uses" like remittance, wire transfers, donations and micropayments, before it reaches a mainstream audience.

"Imagine being able to pay five cents to read an article online instead of these ridiculous pay walls that require expensive monthly subscriptions," he said. "People will start reading the news again. Right now, you can't do that. Try sending five cents over the Internet."

But Diana Furchtgott-Roth, the former chief economist for the U.S. Department of Labor and a senior fellow at the Manhattan Institute, a conservative think tank, was unimpressed.

"It's a gimmick," she said. "The Bitcoin would never work in Cyprus because Cyprus is full of insolvent loans. Putting in different currency is not going to help. They would ideally have their own currency. Whether it's digital or dollars, they need to separate from the euro and put in economic currency that will attract more investment."

Colas was also hesitant about the Bitcoin's future.

"Whether it succeeds or fails is hard to predict," Colas said. "We're clearly in uncharted waters. But one thing is clear: Bitcoin is one more lens with which to assess the ongoing European financial crisis."

Copyright 2013 ABC News Radio


Cyprus Church Offers Assistance in Financial Crisis

Simon Dawson/Bloomberg via Getty Images(NEW YORK) -- Politicians and financiers are scrambling to agree on a deal that would bail out Cyprus and its banks, which are badly in need of a $20 billion loan. Possible solutions include nationalizing pensions, selling a bank to Russia, or -- troubling to bank customers the world over -- taking money out of average Cypriot savers' bank accounts. But might they also have a more divine savior?

The head of Cyprus' Orthodox Church, Archbishop Chrysostomos II, has offered to mortgage the church's assets to help get Cyprus out of its financial hole. How much does it have? In an interview with ABC News, Chrysostomos said the church's land and hotels were worth somewhere in the billions.

Not enough to bail out Cyprus by itself, he admitted, but enough so that Cyprus doesn't have to grovel and live by stringent demands that come with European Union loans.

"The solution will come from within and we have to stand on our own two feet, without anyone's help," said the archbishop, wearing a simple blue cassock, in his office in central Nicosia. "If I don't help my country, my country will collapse. If the people suffer, the church will also suffer the same fate."

Chrysostomos and his aides declined to provide a list of what the church owns, but it is believed to be the country's largest landholder. Chrysostomos said he planned to mortgage the land as well as hotels as collateral. The church is also the largest shareholder of a Cypriot beer and a major shareholder in Hellenic Bank, but aides said those assets were publicly held and therefore not free for the church to mortgage on its own.

"We are going to give our whole fortune to the government," Chrysostomos said.

Chrysostomos praised Cypriot parliamentarians for rejecting a plan that would have taken money out of bank accounts in order to help pay for the loan. He did not mince words for the European financiers and politicians who drafted the deal, and argued Cyprus should be willing to leave the Eurozone.

"Cyprus is an equal member of the European Union. Unfortunately, all these leaders treated us unfairly," he said. "These minds that these European leaders have -- I believe they will destroy Europe by themselves. So I suggest we have to leave them before they destroy the European Union."

Chrysostomos has called for all Cypriots to sacrifice to help pay back the country's debts. He urged the president to create a national bond, and in the interview said he hoped the church was setting an example to the country's richest residents -- "so they will help also."

Chrysostomos spoke softly, surrounded by impressive art and a long table ringed by gold and wooden chairs. By the time he finished speaking to ABC News, a line of people waited outside his office. He said he believes the church holds considerable moral weight in Cyprus and that people will follow its lead in helping the government find a solution.

"Most of the people will support the government," he says. "They are going to listen to the voice of the church, which is the mother of all of us."

Copyright 2013 ABC News Radio


Fitch Places Six Eurozone Countries on Ratings Watch

Photo by David Ramos/Getty Images(PARIS) -- On Friday, the credit ratings agency Fitch put six European countries on a downgrade watch list, causing further threat to the Eurozone which has been facing a debt crisis.

Despite affirming France's triple A rating, Fitch downgraded the country's outlook from stable to negative which could mean a ratings downgrade in two years.

Belgium, Spain, Slovenia, Italy, Ireland and Cyprus were placed under Rating Watch Negative with the probability of a downgrade at the end of a review in Jan. 2012.

Fitch said the region's crisis has been on a negative decline since July causing concern about the financial stability of member nations.

"In the absence of a 'comprehensive solution', the Eurozone crisis will persist and likely be punctuated by episodes of severe financial market volatility," said the agency in a statement.

Copyright 2011 ABC News Radio

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