More on Cyprus: levy needs to pass Congress now

FXstreet.com (Buenos Aires) - In an unprecedented move, European finance ministers had agreed over the weekend, on a levy on Cypriots’ bank account, to save the country near € 6 billion and be eligible for bail-out. The move to take a percentage of deposits in between 6.75% and 9.9%, must now be ratified by parliament, where no party has a majority. If the country does not reach an agreement, it could face the first EU bankruptcy, not just on banks but for the country as a whole.

Whether fears of contagion will arise on Monday, is something yet to be seen. Some may consider that Cyprus is a sui generis case, as many account holders are foreign, particularly Russians. However, the fact that small account holders will also be affected exacerbates the feeling of unfairness and will put investors on guard. Authorities may ensure there’s nothing to fear in other countries, but retail depositors may choose not to believe these words.