Germany and ECB clash over Cyprus

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Germany and ECB clash over CyprusThe European Central Bank is currently at odds over with the German Finance Minister, Wolfgang Schaeuble, over the consequences of not bailing Cyprus out and what this would mean for the Eurozone as a whole. Negotiations on a 17.5 billion euro rescue package for Cyprus which began in November 2012 are currently being discussed and it is hoped that a bailout will be agreed upon by March at the very latest however Germany is reluctant to agree anything at the moment. Only last week Schaeuble claimed that Cyprus was not ‘relevant’ to the survival of the Eurozone however the ECB has refuted this statement and said that this was a matter for the ECB to decide and not Germany. They fear that a Cypriot bankruptcy would destroy the recent market calm about the Eurozone. Discussions will continue pending a report by the troika of EU commission officials, ECB and the International Monetary Fund. Meanwhile Cypriot officials claim that Germany is stalling the island’s bailout by accusing Cyprus of money laundering. A leaked report by German Foreign Intelligence pointed to the fact that Russian and Ukrainian oligarchs are laundering money in Cyprus, an accusation that Cyprus strongly denies however Germany is not convinced. Cyprus replied to the accusations by stating ‘It is obvious that behind the attacks on Cyprus there are vested interests. Those who attack Cyprus want to take its role as a serious financial and investment centre’. It remains to be seen how this matter will be resolved.