A European Central Bank (ECB) Executive Board member, Jorg Asmussen, said it’s critical for the stability of the Eurozone to finalize a bailout deal for Cyprus’ faltering economy by the end of March, a month after the country’s Presidential elections.
Asmussen, a member of the German Social-Democratic Party, insisted that a rescue package equivalent of those Greece, Ireland and other countries have received is necessary for the Cypriot economy, Deutsche-Welle reported.
The ECB regulates the monetary union of the 17 EU countries which have adopted the euro currency. The main goal of the ECB, as stated in it’s founding convention, is price stability. It is also one of the three institutions that are lending money through the rescue packages given to Ireland, Greece, and Portugal, along with the European Union and International Monetary Fund.
According to Asmussen, the main problem is not in Nicosia but in Berlin. Both the CDU and SPD, the German Conservatives and the German Social-Democrats have rejected a rescue package for Cyprus, with the SPD being more friendly towards that solution. German Chancellor Angela Merkel has repeatedly stated that a failure of Cyprus will not result into a systemic failure.
Asmussen also stated that without a bailout, Cyprus will default. EU countries have been reluctant to help because of the island’s reputation for money-laundering money for organized crime, including from Russia. Cyprus’ banking system caused the crisis by its exposure to Greek bonds, whose value was reduced 74 percent by a previous Greek government.