Global Equity Markets Decline on Uncertainty Surrounding Cyprus Bailout Deal

by Colonel on March 25, 2013

“Global equity markets and the euro retreated on Monday after a senior euro-zone official said the Cyprus bailout reached earlier could be used to shape other regional banking problems by shifting more risk to depositors and stakeholders.

The Cyprus rescue is forcing depositors and bank bondholders to bear losses, a deal that could become a template for future bank restructurings in the euro zone, said Dutch Finance Minister Jeroen Dijsselbloem.

Cypriot policymakers reached an 11th-hour deal with the European Union, the European Central Bank and the International Monetary Fund to shut down the country’s second largest bank in return for $13 billion in rescue funds.

While the bailout will avert a collapse of the Cypriot banking system and keep Cyprus within the euro zone, the agreement set a painful precedent for the region.

” — (Herbert Lash, Additional reporting by Marc Jones in London, Julie Haviv in New York; Editing by Chizu Nomiyama, Jan Paschal and Leslie Adler), Copyright 2013 Thomson Reuters

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