AP News

News Summary: Debate over Cyprus rescue as model


RECUE DISCORD: The top institutions in charge of Europe's single currency disagreed over whether the 10 billion euro ($13 billion) rescue plan for Cyprus will become a template for futures rescues. The plan would dissolve the country's second-largest bank, wipe out bondholders and inflict losses of up to 40 percent on deposits larger than 100,000 euros ($130,000).

NEW MODEL?: Jeroen Dijsselbloem, the head of the Eurogroup of euro finance ministers, said forcing losses on banks' shareholders, bondholders and even large depositors could become the model. But Benoit Coeure of the European Central Bank dismissed the idea, saying Cyprus's situation is unique because of the island nation's outsized financial sector.

PROPOSAL: Draft laws proposed by the European Commission explicitly foresee the possibility that deposits above the guaranteed level would be at risk in rescues starting in 2015.


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