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Cyprus Rejects Bailout Tax

Cyprus overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout on Tuesday, throwing international efforts to rescue the latest casualty of the euro zone debt crisis into disarray.

cyprus

Cyprus will have to find some other way to come up with the money they need to qualify for a bailout. Lawmakers voted overwhelmingly to reject a plan that would have seized part of people's bank deposits, even after altering the plan to protect small deposit holders. Protesters outside Parliament cheered the news. The European Union said before the vote that they would withhold €10 billion in desperately needed bailout loans unless Cypriot depositors shared the cost of the rescue.

Reuters:

Cyprus overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout on Tuesday, throwing international efforts to rescue the latest casualty of the euro zone debt crisis into disarray.

The vote in the tiny legislature was a stunning setback for the 17-nation currency bloc, angering European partners and raising fears the crisis could spread; lawmakers in Greece, Portugal, Ireland, Spain and Italy have all accepted austerity measures over the last three years to secure European aid.

With hundreds of demonstrators outside the parliament chanting "They're drinking our blood", the ruling party abstained and 36 other lawmakers voted unanimously to reject the bill, bringing the Mediterranean island, one of the smallest European states, to the brink of financial meltdown.

Banks in Cyprus will remain closed on Wednesday in order to prevent a run on the banks. The island stock exchange will remain closed as well.

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