Reuters - Video

Edition: U.S. | U.K. | IN | CN | JP

Finance Videos

Euro zone shivers as Cyprus panics

Monday, March 18, 2013 - 02:20

March 18 - As Cyprus's parliament meets to discuss the seizing of money from bank deposits as part of an EU bailout Sonia Legg looks at why the move has sent a shiver across the euro zone.

▲ Hide Transcript

View Transcript

Protestors were out in force as Cyprus's MPs held crisis talks. The island may be tiny but the impact of its financial crisis is potentially huge. (SOUNDBITE)(Greek) PROTESTER WHO DID NOT WANT TO BE NAMED SAYING: "We are cleaning ladies and spend our days trying to earn some money to feed our children, now they are saying they are going to take it from us? It's unacceptable!" (SOUNDBITE)(Greek) PROTESTER, MOSES MOESIS, SAYING: "If the government had asked us to donate what we could, we would have offered a month's wages maybe even two months, but what they are doing now is creating chaos." Cashpoints were emptied at the weekend after the EU decided to seize money from bank depositors as part of a bailout. The shock that such savings were no longer sacrosanct spread far beyond Cypriot shores. Commerzbank's Peter Dixon. SOUNDBITE: Peter Dixon, Global Financial Economist, Commerzbank, saying (English): "If I were a saver in Spain, maybe Italy I think I'd be looking a scant at these measures and thinking, well this could happen to me so I don't think we should take it at face value, the notion that it's a one-off. It may well be but the rational response would be to treat it as the thin end of a big wedge." Cyprus accounts for just 0.2% of European output. And Brussels insists the move is a one-off. There was no sign on Monday that savers in other European countries had started to withdraw funds. But investors were clearly rattled. Cyprus has been badly exposed to its neighbour Greece. ETX Capital's Ishaq Siddiqi says it needs a bailout whatever the cost. SOUNDBITE: ETX Capital Sales Trader, Ishaq Siddiqi, saying (English): "They are stuck between a rock and a hard place. For them they have to make a very difficult choice in order the raise the funds for their bailout and kick start growth and unfortunately for Cypriot people they are being punished right now. They real question now is is this an isolated case or is this something that is going to be seen across the whole of the euro zone." The decision not to fund the entire 10 billion euro bailout was partly due to the large number of Russian account holders in Cyprus. Germany in particular was reportedly not keen to fund non EU citizens. The Cypriot government is now trying to find ways to soften the blow to depositors and make the deal acceptable to parliament. If it's not approved the euro zone could be dragged back into crisis.

Press CTRL+C (Windows), CMD+C (Mac), or long-press the URL below on your mobile device to copy the code

Euro zone shivers as Cyprus panics

Monday, March 18, 2013 - 02:20