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UPDATE: Cyprus to create ‘solidarity fund’

The country’s president said a decision must be made today. Meanwhile, the Finance Minister remains in Russia for negotiations.

Updated 12.48am

BANKS IN CYPRUS remain closed today as political leaders scramble to find a bailout plan that will be acceptable for parliament.

The European Central Bank has imposed a deadline on the country’s Central Bank, stating it will pull its emergency liquidity assistance on Monday, 25 March.

Such help will only be considered after that date if an EU/IMF programme is in place that would “ensure the solvency of the concerned banks”, the ECB said in a statement this morning.

Reports from Cyprus this morning suggest the government has decided to set up an Investment Solidarity Fund in a bid to secure the required €5.8 billion to unlock the €10 billion EU rescue package.

The original rescue plan was rejected because of a controversial tax on bank savings.

“Following a proposal by the President of the Republic there was a consensus reached and a unanimous decision was taken for the establishment of an Investment Solidarity Fund. The proposal is currently undergoing legal and technical processing by the Law Office of the Republic,” spokesman Christos Stylianides said in a written statement.

It is understood that the bank levy was not discussed by officials today.

According to the official CNA news agency, President Nicos Anastasiades tabled ‘Plan B’ at 7.30am (Irish time) and a vote is expected later this evening.

Anastasiades has warned that a decision must be made today.

The president chaired a cabinet meeting last night, and held a conversation with his French counterpart Francois Hollande. The Cyprus leader asked for Paris’s support as the nation attempts to overcome its economic crisis.

It is understood the new deal could include some form of Russian assistance. Minister of Finance Michalis Sarris remains in Moscow today as he continues to explore the possibility of Kremlin participation in any bailout.

CNA, citing a reliable source, believes working groups were set up between the two sides yesterday and discussions continued into the early hours of this morning.

Banks will not re-open in Cyprus this week to avoid a run on deposits. The bank holidays were called “on grounds of public interest in order to ensure financial stability”.

Despite fears, markets acted benignly this morning and the euro remained steady in Asia. The National Australia Bank said that fears of contagion had eased “for now”.

-Additional reporting by AFP

Read: Cyprus president demands bailout decision on Thursday

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