“European finance ministers left open the possibility of saddling bank depositors and bondholders with some of the costs of an aid package for Cyprus, potentially unsettling markets as the bailout negotiations drag on.
Dutch Finance Minister Jeroen Dijsselbloem declined to rule out a “bail in” of Cypriot depositors, even after concern over the treatment of bank account holders prompted the first signs of capital flight from the island.
“All the questions on the elements” will be dealt with by late March, Dijsselbloem told reporters after chairing a meeting of euro-area finance ministers in Brussels yesterday. “That is my answer to all these questions, I’m afraid.”
By leaving the treatment of bank depositors in doubt, European governments risked replaying earlier clashes over imposing losses on bondholders. Creditors used that tactic for Greece and then pledged never to do so again because it shattered market confidence.
A week after Nicos Anastasiades took over as Cypriot president, finance ministers said the pieces of an aid package have yet to fall into place and probably won’t do so until late March.
