The European Union, the European Central Bank and the International Monetary Fund have agreed to give Cyprus a $13 billion bailout to save it from defaulting on its debt. But they want the government to secure the rest of the funds needed to support Cyprus’ failing banks.
Earlier in the week, parliament rejected the unpopular idea to raise the money by taxing some deposits in the banks. Cypriot leaders were faced with finding other ways to secure the emergency funding from international lenders.
On Thursday, officials discussed restructuring the country’s debt-ridden banks and raising money from domestic sources, such as pension funds and the subsidiaries of foreign banks operating on the island.
If unable to raise funds, the island may be pushed out of Europe’s common currency zone.
The island’s banks are closed until Tuesday to prevent panicked investors from withdrawing large sums. However, anxious depositors are able to withdraw limited amounts from automated teller machines.
If it eventually secures a bailout, Cyprus is planning on using much of the money to refund its beleaguered banks that have been weighed down with losses on Greek government bonds that were reduced in value to help resolve the Athens debt crisis.