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EU Flexibility on Cyprus Drops Tax Minimum to 5.8 Billion Euros

“Euro-area finance ministers told Cyprus to raise 5.8 billion euros ($7.5 billion) from bank depositors to unlock emergency loans, maintaining the revenue target while suggesting sparing small-scale savers.

The finance chiefs from the 17 euro countries kept the pressure on Cyprus as they signaled flexibility in applying the tax announced three days ago. The levy sparked outrage in the island nation and concern among investors about setting a precedent by breaking the taboo against raiding bank accounts.

“Cypriot authorities will introduce more progressivity in the one-off levy compared to what was agreed on March 16, provided that it continues yielding the targeted reduction of the financing envelope and, hence, not impact the overall amount of financial assistance,” the ministers said in a statement following a teleconference late yesterday.

With Cypriot lawmakers voting today on how to spread the burden among account-holders and the proposed bank tax roiling markets, the U.S. called for a “responsible and fair” resolution to the financial crisis in Cyprus, the fifth euro country to seek a bailout since 2010. The euro slipped in early European trading on concern that Parliament will reject the deal.

Euro Slips

The euro traded at $1.2942 as of 8:40 a.m. Frankfurt time, falling from as high as $1.2970. Futures on the Euro Stoxx 50 Index fell 0.4 percent….”

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