March 21, 2013 / 8:46 AM / 7 years ago

HIGHLIGHTS-Eurogroup's Dijsselbloem comments on Cyprus

BRUSSELS, March 21 (Reuters) - Eurogroup chairman Jeroen Dijsselbloem said on Thursday the problems in Cyprus pose a systemic risk to the euro zone.

Dijsselbloem, who chairs the Eurogroup of euro zone finance ministers, told the European Parliament he hoped Cyprus could find solution that is financially and economically sound, and politically feasible, to help it out of its difficulties.

Following are highlights of his comments to the parliament:



“I don’t think that the ECB is using threats. What they’re doing is doing as much as they can within their mandate, and the ELA (emergency liquidity assistance) facility can only be made available to those banks who are (solvent) and have a future.

“And if those banks are in deep trouble, there has to be at least the prospect in the near future of a programme of recapitalisation, of bringing these banks into safe havens again.

“The ECB, it’s within their mandate and their independence to decide whether they feel they can go on providing ELA support, and all they have said, if I understand correctly, is that they think that it’s very, very urgent that there is a programme, and that they can only go on by making available ELA if there is a programme.

“So that just stresses the point of the urgency, first of all on the Cypriot government. We need to reach an agreement and a programme very soon, and I think the ECB has a valid point there.”


“When I take stock of the situation, I see that this package has been voted against in the parliament, and that the Cypriot authorities are now looking for an alternative package.

“Whether that is possible within the outline that we have, in order to make it sustainable, is for me still a question.

“Within the Eurogroup we have said we will allow time and space for the Cypriots to look at different angles and to come up with different, alternative proposals. But they have to be financially sound, they have to be financially and economically sustainable and, of course, politically feasible.

“So, I’m not sure that this package is completely gone and failed, because I don’t honestly see many alternatives. There is of course a different way to do the levy, and we’re very open to a more fair approach to the way the levy is structured.”


“We have to look at debt sustainability, we have to look at burden-sharing, we have to look at future growth and a new model for the banking system which is so important for Cyprus.

“Basically it led to the conclusion that the programme shouldn’t be much bigger than 10 billion (euros), because the amount of the total loan to Cyprus is crucial for the question: ‘Will they be able to pay off the debt, will they be able to find a new economic future?’.

“That was the first principal point to be made. The second point being that sustainable debt for Cyprus meant a debt-to-GDP ratio of no more than 100.

The third would be that there had to be a restructured and a healthy financial sector to allow for new growth on Cyprus.”


“The levy I can strongly defend, because it is a direct way to ask a contribution of the deposits of the banking sector in Cyprus, which is inevitable if you want to a build a package which doesn’t bring more loans and more debt to Cyprus than the 10 billion (euros) I mentioned before.

“I still think its probably inevitable there will be some kind of levy in the final package that we will agree upon.”

“The Eurogroup thinks it’s very important that we should have a fair burden share, and that means a larger contribution from large depositors than, of course, from small depositors.”

“The Eurogroup thinks it’s very important that we should have a fair burden share, and that means a larger contribution from large depositors than, of course, from small depositors.”


“I think that in the present situation, and the current worries about the stability of the euro zone, we simply have to stand for the integrity of the euro zone.

“Therefore any debate on is it a systemic risk, should be do anything, I think we should immediately move beyond that and say what are we going do about it.

“That’s how I like to approach a problem. So in the present situation I think there is definitely a systemic risk and I think the unrest of the last couple of days has proven this, unfortunately.”


“...The situation in Cyprus was very, very specific and very, very problematic in the financial sector so that, no, there would not be the same kind of package and approach to any other country.”


“There is already a loan of 2.5 billion (euros) and working towards the meeting of last Friday there have been many contacts with the Russians about what they could do with that loan, extending the period, dropping the rates on that loan.

“Any other options, to go further, another loan or an investment in the banks, the Russians let us know that they are not willing to do that.

“Of course, the Cypriot government is now talking to the Russian government whether more can be done, I don’t know the outcome of that yet.

“The only thing I can say that if the Russians were to say we could lend, that wouldn’t help on the sustainability of the debt situation. Building up the debt in Cyprus does not help them to work towards a new future.”

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below