Talks continue in Moscow as the government of Cyprus tries to put together a deal to prevent the country’s bankruptcy by the next week.
The European Central Bank (ECB) has threatened to withdraw support for banks on the Mediterranean island on Monday, stopping the supply of emergency funding. Stock markets across the continent fell on Thursday morning following the ECB’s threat.
A pre-planned meeting between EU President Jose Manuel Barroso and Russian prime minister Dmitry Medvedev coincides with the Kremlin’s criticism of an EU proposal of a levy on Cypriot bank deposits rejected by the parliament in Nicosia.
Giving his assessment of the levy, Medvedev said: “So far, the actions of the European Union and the European Commission together with the Cypriot government, regretfully resemble a bull in a china shop to me. It’s as if they miss the crisis.”
Chairman of the Eurogroup Jeroen Dijsselbloem warned that the problems in Cyprus pose a systemic risk to the whole eurozone.
There is speculation that any deal with Russia will involve a stake in Cypriot offshore gas fields.
In the meantime, to avoid a run on Cypriot banks, the government in Cyprus has closed them until Monday, which is a bank holiday, effectively meaning banks will not reopen until Tuesday. The Cyprus stock exchange will also remain closed until Tuesday.