With the size of the messy bailout for Cyprus increasing, the island’s fiscal fate tops the agenda as the eurozone’s 17 finance ministers gather in Dublin on Friday.
There is growing unease about the rescue package on reports the total will be 23 billion euros, rather than the original 17 billion.
That is expected to spark intense debate in Dublin over whether the deal was successfully handled.
IMF head Christine Lagarde – who has been closely involved in the Cyprus bailout – told the Economic Club of New York its circumstances were exceptional: “We believe that for most European countries, fiscal consolidation is a must. Cyprus was, as I said and I’m happy to repeat it. It’s no template. It doesn’t set standards because it was not a standard itself. It was vastly different from many banks in other regions and in other countries in Europe.”
With the reported increased cost of the Cyprus bailout, the European Commission believes Nicosia should sell some of its gold reserves to contribute around 400 million euros.
The Cypriot central bank poured cold water on that idea saying it had not “raised, discussed or debated” it with the bank’s board of directors.
The prospect has the market somewhat concerned given that a big sale would push down the price. Central bank gold buying was one of the few areas of demand to increase last year at a time jewellery, coin and gold-bar buying was on the wane.