Cyprus crisis deepens: Bailout rejected, banks may not reopenSubmitted by celeste on Wed, 03/20/2013 - 10:10
Cypriot leaders held crisis talks on Wednesday to avert financial meltdown after rejecting the terms of a controversial European Union bailout, turning instead to Russia for help.
Banks on the Mediterranean island may never reopen, Germany warned after lawmakers late Tuesday turned down a $12.9 billion deal that would have seen Cypriots lose up to 10 per cent of their bank deposits.
Thousands of Cypriots withdrew savings over the weekend fearing the deal might pass, emptying ATMs and sending global money markets into a steep dive.
Banks were ordered to remain closed after finance officials predicted a run on savings and a huge outflow of capital if they were to reopen.
Germany's finance minister, Wolfgang Schaeuble said major Cypriot banks were "insolvent if there are no emergency funds,” according to a BBC report, meaning savers might lose all their money if no deal was reached.