Cyprus has ‘until Monday’ to avoid collapse

POLITICIANS are battling to shore up Cyprus’s most troubled bank as the nation looks to find the 5.8 billion euros it needs to secure a bailout and avoid financial ruin.

The debt-ridden country has been told it must raise this money by Monday if it is to receive 10 billion euros from its fellow eurozone countries and the International Monetary Fund.

If it fails, the European Central Bank has warned it will cut off emergency support to the banks, letting them collapse.

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That would throw the country into financial chaos and, ultimately, cause it to leave the eurozone, with unpredictable consequences.

Panicked customers rushed to get cash from ATMs yesterday amid fears for the future.

Party leaders and the government were hashing out three new laws last night, ranging from restricting bank transactions to restructuring the most troubled bank, Cyprus Popular Bank, or Laiki.

The pressure has increased since lawmakers rejected a proposal to seize up to 10 per cent of people’s bank accounts. Banks have been closed since last weekend to avoid a run and will not open until Tuesday at the earliest.

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The escalating crisis sent world markets back into the red yesterday. London’s FTSE 100 Index fell for a fifth straight session, down 0.9 per cent to 6375.2. On Wall Street, the Dow Jones Industrial Average fell by as much as 129 points by mid-afternoon before paring the loss to close down 90 points.

Market report: Page 18.