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Cyprus vote on bank restructuring delayed; Russia refuses to lend financial support

FXstreet.com (Barcelona) - The Cypriot parliament’s crucial vote on the bank restructuring and investment fund bill, which was supposed to begin at 8GMT today, has been postponed until the afternoon. The legislation, if passed, would allow the country to raise at least a part of the funds (3.5 billion euros out of the remaining 5.8 billion euros) required by the Troika before it approves a bailout program for Cyprus.

According to Bloomberg, the draft proposition of the bill includes imposing a tax of up to 40% on bank deposits exceeding 100.000 euros. It also suggests creating an “Investment Solidarity Fund" which would be backed by various state assets such as state pension funds' reserves church property or revenues from the country's natural gas reserves.

The Cypriot government is pressed for time as the ECB announced that should no agreement with the Troika be reached by Monday it would withdraw liquidity support for Cypriot banks. That “would make them insolvent and open the door to a disorderly euro exit” for Cyprus, as the Bank of Tokyo-Mitsubishi UFJ team of analysts suggest.

Meanwhile, Cyprus's finance minister Michalis Sarris, has returned from Moscow where he was trying to convince Russian officials to participate in the bailout. His efforts came to nothing however, as his counterpart Anton Siluanov told reporters that before Russia makes any decisions on financial aid for Cyprus it would like to see the outcome of the bailout talks with the Troika.

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