EU ministers ‘got it wrong’ hitting small Cyprus savers
FINANCE ministers ‘got it wrong’ when they agreed to allow the Cypriot government to target the deposits of small savers last week, Lucinda Creighton has claimed.
The European Affairs Minister yesterday said the initial deal proved unsatisfactory.
‘This was a decision by the Eurogroup of finance ministers,’ she told RTÉ’s Today with Pat Kenny.
‘The view in Cyprus was to impose a levy of 6.7 per cent on deposit holders under €100,000. The bottom line is they got it wrong and I’m pleased that relatively quickly they have a better solution in place which hits the people who should be hit.
‘I think it’s fair to say Cypriot taxpayers from all over the eurozone should not be paying for deposit holders from outside the eurozone. It’s absolutely appropriate the haircut be imposed.’
Meanwhile she claimed the Government here is maintaining its ‘very vocal campaign’ to remove the burden of bailing out the State’s broken banks from taxpayers. This comes after Eurogroup chief Jeroen Dijsselbloem cast doubt over the use of the European Stability Mechanism to bail out banks. ‘We should aim at a situation where we will never need to even consider direct recapitalisation,’ he said earlier this week.
The Coalition have pinned their hopes on using the multi-billion euro firewall to help soothe the burden imposed when AIB and Bank of Ireland were funded with public cash, but Mr Dijsselbloem’s comments led to fears that the State may not secure favourable terms.
However, Ms Creighton said creating a banking union is the first step in securing a deal. She said: ‘The ESM fund is there to be used but there has to be some private sector involvement. We’re unlucky because we were the first country in this new situation that no one knew how to deal with. There is a greater understanding at EU level now that we are a special case and we have a unique problem. I think it will be addressed.’
Taxpayers’ cash was used to pay billions of euro to unsecured bondholders who were seen to have gambled on Ireland’s fate in the boom years. The Government consistently denied it would be possible to impose a haircut on the investors.
Asked if Finance Minister Michael Noonan would use the fact that Ireland was not allowed to burn bondholders as a bargaining chip in their negotiations to secure a structural debt write-down, a Government spokesman remained tight-lipped.
He said: ‘We remain very focused on this but we are not looking towards an outcome until the end of the year, the Taoiseach has said that in the past. I cannot comment on how Michael Noonan will approach the talks’.