Special convocation in cyprus on money laundering allegations

Special convocation in cyprus on money laundering allegations

"We need this quickly," eurogroup head jeroen dijsselbloem said on monday evening after consultations in brussel. The package is to be agreed in march – after the cypriot presidential elections, that is. "If necessary, the agreement (for the aid program) will include additional measures"."

Nicosia had previously denied accusations of money laundering through financial houses of the country again. Finance minister vassos shiarly wanted to insist that no private auditing firm be hired by the euro group to conduct checks to see if there is money laundering in cyprus’s financial institutions. Nicosia, however, could not enforce this course.

German finance minister wolfgang schauble said: "we have once again made it very clear today that cyprus must also appoint an independent institution to be able to document the implementation of money laundering standards in cyprus in a truly reliable manner. This is a central point."

Cyprus had applied for aid in the summer of 2012. This involves aid loans with a volume of around 17.5 billion euros – of which around 10 billion euros alone is accounted for by bank aid.

Dijsselbloem, when asked, did not rule out a debt cut for private creditors in the cyprus rescue. "We look at all the elements and instruments we could use."He later said that the details of the program had not yet been discussed in the eurogroup.

Previously, a media report had caused irritation, according to which an extreme scenario of the EU commission proposes that investors in cypriot banks and holders of government bonds should also participate. "There is no proposal from the commission along the lines of this report" – with these words, eu commissioner for preservation olli rehn clearly denied the information of the "financial times" (monday).

Dijsselbloem’s acting chief of staff jean-claude juncker had assured that there would be no debt cut in cyprus. The eurogroup made it clear several times in the past that greece would remain a unique case. The debt cut in greece had led to considerable uncertainty on the markets.

The heads of state also debated direct financial injections from the european bailout fund ESM for ailing eurozone banks. An agreement on this is to be reached by june. Dijsselbloem said that payments from the ESM could be limited for this purpose, also the use of private capital was possible. Direct bank recapitalization is controversial among eurozone countries – while crisis-hit countries like spain insist on this option, rich states like germany are slamming on the brakes. The prerequisite for the bank financial injections is the common bank supervision, which is not yet in place.

After the dutchman dijsselbloem took over the leadership of the eurogroup in january, he is now also chairman of the board of governors of the ESM fund. This was announced by the ESM.

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