Luxembourg Prime Minister Jean- Claude Juncker said euro-area leaders should avoid imposing losses on bondholders as part of a bailout package for Cyprus because a so-called haircut would risk unsettling financial markets.
“We mustn’t apply a Greece-type solution to Cyprus because this could trigger massive uncertainties in financial markets if it seemed that we don’t care about our credibility because we would do the same in Cyprus than in Greece,” Juncker said today in Brussels after a summit of European Union leaders. “There are other possibilities.”
Finance ministers from the 17 nations using the euro will discuss an aid program for Cyprus at a meeting starting at 5 p.m. in Brussels. The finance chiefs didn’t receive specific instructions from the EU leaders, Finnish Prime Minister Jyrki Katainen said.
Cyprus, the fifth euro-area nation to request international assistance, has been debating the contours of a bailout package since last June. Dutch Finance Minister Jeroen Dijsselbloem, who leads the group of euro finance chiefs, said two days ago that the so-called eurogroup aims to cut the size of a Cypriot rescue to about 10 billion euros ($13.1 billion) from an estimated 17 billion euros.
“The statements he made are going in the right direction,” Juncker said today.
“The Eurogroup has to find a solution tonight,” Juncker said. “I expect that this will happen because time is pressing.”
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