FRANKFURT (MarketWatch) -- Cyprus's latest plan to secure an international bailout and remain in the euro was dealt a blow Friday, news reports said. German Chancellor Angela Merkel on Friday reportedly told German lawmakers that a plan by the Cyprus government to bundle pension funds in with state assets as part of an investment fund that would be used as collateral for fresh bonds was unacceptable, Reuters reported, citing parliamentary sources. Opposition to the fund plan may make it more likely the government will return to a tax on Cypriot bank deposits to help raise the 5.8 billion euros ($7.5 billion) needed to secure a 10 billion euro rescue from international lenders, Greek newspaper Kathimerini reported.
The German government is reportedly very critical of developments in Nicosia this week. Participants in a special meeting of Chancellor Angela Merkel's party group in parliament on Friday said the German leader has warned that Cyprus' partners may soon lose patience and that the country should not try to test the troika. She also criticized leaders in Nicosia for not having communicated with troika officials in recent days.
For her part, Merkel opposes any plan that would tap Cypriot pension funds in order to fix the country's banking problems. Participants in the meeting quoted Merkel as saying that EU social principles could not be abandoned. She also reportedly stated that Cyprus appears not to have recognized that the business model it has used up until now has ended. At the same time, she added: "We want Cyprus to remain the euro zone." She is also reported to have said that she hopes the situation in Cyprus doesn't lead to a "crash".
Both Merkel and German Finance Minister Wolfgang Schäuble have called for major structural reforms in Cyprus. Merkel has noted repeatedly that depositors at Cypriot banks are provided with higher interest rates than those at German financial institutions. She is also a proponent of the one-time bank account levy included in Saturday's bailout deal, although she opposes applying the tax to small-scale savers.
Meanwhile, Volker Kauder, the party whip of Merkel's conservative Christian Democrats said, "We cannot accept that peoples' pensions will be put up as collateral." He added that "we want Europe to remain as a whole," but that Cyprus "is playing with fire."
There's a lot of anti-Germany spin out there.
All of it essentially blaming Germany for everything.
Gee, I wonder why.
If any of you are capable of critical thought and read
you'll find that
1.Germany believes that 20% of 1ook deposits and above will suffice as the amount needed to grant said loan.
2.Germany has no intention of destroying Cyprus citizens pension funds.
Which is why they are off limits as criteria/collateral for any loan.
3.Germany never intended deposits under 100k be "taxed".
It's one thing to have Spx.Trader constantly bashing Germany and blaming it for everything.
He's paid to do that.
It's quite another thing for the rest of you all to fall into the trap.