Cyprus looks to Russia for help in crisis

Markets calmed down yesterday from all the excitement over whether the Cypriot economy and banks would implode as they sought an alternative source of funding having rejected the conditions for an EU/IMF bailout.

The ECB helped to stabilise the situation when it reaffirmed its commitment to provide “liquidity within the rules” for the island’s banks, but executive board member, Jorg Asmussen pointed out in the German media that under the rules, they can only provide emergency liquidity to solvent banks, increasing the pressure on the island.

The country’s Central Bank announced that the banks will remain closed until Tuesday in an effort to prevent a bank-run. In the meantime, the Cypriots continued a series of meetings in Nicosia and in Moscow to come up with an alternative to haircutting savers in their two troubled banks.