Quadriga: Russian Roulette the Cyprus Euro Gamble

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Is the Euro Crisis returning? The parliament in Cyprus has rejected a new law that would apply a one-time tax on private bank accounts. Not a single parliamentarian voted in favor of the measure despite it being a precondition for receiving a 10 billion euro bailout from the eurozone and the International Monetary Fund.

European finance ministers had intended the levy to raise nearly 6 billion euros to help recapitalize the countrys banks, which need the bailout to avert bankruptcy.

Even after the measure was changed to exempt accounts with a balance of under 20 thousand euros, critics still see it as an extreme policy shift that would have serious consequences on investor confidence.

After rejecting EU conditions for a bailout, Cyprus is looking to Russia for help. But plans are also being made by various eurozone countries, the IMF, the ECB and the indebted country itself, should a bailout not be forthcoming.

In the past, banks in Cyprus have lured investment with offers of high
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Producer : Deutsche Welle