Mar. 18 - Cyprus's cabinet arrives at parliament to vote on a plan to seize money from bank deposits as part of an EU bailout, a move that has sent a shiver across the bloc, caused the euro to tumble and stock markets to dive. Rough Cut (no reporter narration).
Rough Cut (no reporter narration). The announcement at the weekend that tiny Cyprus would impose a tax on bank accounts as part of a 10 billion euro ($13 billion) bailout broke with previous European practice that depositors' savings were sacrosanct. Ahead of the vote in parliament, the government was working on a plan to soften the blow to smaller savers, by tilting more of the tax towards those with deposits greater than 100,000 euros. The government says Cyprus has no choice but to accept the bailout with the levy on deposits, or go bankrupt. Residents on the island emptied its cash machines to get their funds over the weekend. The move not only infuriated Cypriots, it unnerved depositors in the euro zone's weaker economies and investors fearing a precedent that could reignite market turmoil. Brussels has emphasised that the measure is a one-off for a country that accounts for just 0.2 percent of European output. The worst fear is that savers in other, larger European countries could become nervous and start withdrawing funds, although there was no immediate sign of that early on Monday. Monday is a bank holiday in Cyprus, giving the government until Tuesday to approve the measures before banks open. The bailout is needed mainly to recapitalise banks. Approval in the fractious 56-member parliament is far from a given: no party has an absolute majority and three parties say outright they will not back the tax. A vote initially planned for Sunday was rescheduled to give more time to build a consensus. Faced with a growing public backlash, Cypriot finance ministry officials began discussions with lenders on Sunday to lessen the blow for smaller savers.