Eurozone finance ministers on Monday maintained that Cyprus need to take strong measures to tackle money-laundering before receiving a bailout from its Eurozone partners. However, no rescue deal is likely to be in place before the presidential elections due this month.
"A private firm needs to get involved" to look into the money laundering allegations and a report will be obtained in March, Jeroen Dijsselbloem, new chief of the Eurogroup, said after the ministers' meeting in Brussels on Monday.
Any deal will have to wait until the Cypriot presidential elections scheduled for February 17. Dijsselbloem, who is also the Dutch Finance Minister, indicated that a bailout deal between Cyprus and international creditors will be in place by next month.
At the same time, he declined to rule out the possibility of private depositors at Cypriot banks taking losses in case of a bailout. However, EU Economic and Monetary Affairs Commissioner Olli Rehn told reporters that there was no such proposal from the European Commission. Cyprus asked for bailout in June last year, which is estimated at around 17 billion euros. The bailout has been delayed due to allegations of money laundering by Russian billionaires. The size of the required bailout amount, which roughly equates the country's annual economic output, also overshadow the country's bailout prospects.
Responding to queries regarding the recent strengthening of euro, Dijsselbloem said the currency "was not discussed at great length". However, he opined that the G20 will be a proper forum to raise the issue.
Finance Ministers and Central Bank Governors' of the Group of Twenty nations are scheduled to meet in Moscow on February 15 and 16.
Meanwhile, the Board of Governors of the European Stability Mechanism (ESM) on Monday elected Dijsselbloem as its Chairman. The ESM has a total subscribed capital of 700 billion euros and has an effective lending capacity of 500 billion euros.
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