A senior member of the Cypriot government is warning that the country's two biggest banks may never open again.
The Interior Minister's comments come following the parliament's rejection yesterday of a levy on bank savings over €20,000.
The controversial measure was among the conditions attached to a €10bn EU-IMF bailout deal for Cyprus.
The Cypriot President held emergency talks with political party leaders in Nicosia this morning to discuss the development.
Cypriot financial institutions remain closed today amid fears of a run on the banks over the plan to tax savings.
Meanwhile, the European Commission has said this afternoon that any new Cyprus bailout must guarantee that its debt burden is sustainable.