THE BANK OF Cyprus, the island’s largest bank, appealed today to the government and political leaders to reach a bailout deal with eurozone lenders to save the economy from ruin.

“The Cyprus economy is on the brink and in a fragile state. The next move may prove its salvation or destruction,” the bank said in a statement, as the island’s heavily indebted banking sector faced collapse.

The European Central Bank warned today it was ready to pull the plug on emergency funding for Cyprus banks unless the government clinched a bailout deal by Monday.

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The Bank of Cyprus and the Popular Bank in particular were heavily exposed by the Greek debt crisis and urgently need funding to prevent a meltdown.

The government cautioned against panic while scrambling out a “Plan B” to resolve the chaos unleashed by an initial plan to tax bank accounts – many of them Russian – by €5.8 billion to complement €10 billion in eurozone and IMF loans between now and 2016.

Parliament was expected to vote on the measure later today.

With Cypriot banks in lockdown until next Tuesday, queues grew at cash dispensers outside the island’s second largest bank, Popular Bank, as rumours flew it would close for ever.

Cyprus Central Bank spokeswoman Aliki Stylianou denied the rumours of the bank’s closure, speaking to state radio.

According to Cyprus News, party leaders are optimistic that the crisis will be resolved. The European Commission has also said that an “orderly way forward” is still possible.

- © AFP, 2013

Read: UPDATE: Cyprus to create ‘solidarity fund’>