Eurogroup meeting: No earth shattering news, but statements on Cyprus and Greece released

The Eurogroup meeting didn’t bring earth shattering news, but statements on Cyprus and Greece were released. On Cyprus, the Eurogroup is confident that a swift conclusion of negotiations on a Memorandum of Understanding can be reached. A political agreement is expected in the second half of March. This means that the Euro group accepts that Cyprus is systemically important and needs a bailout package, something earlier disputed by some countries. The Cypriot government accepts an independent evaluation of the implementation of the anti-money laundering framework. This was a request of Germany. Details about the package are still to be sorted out. Privatisations are one possibility to keep the amount lower and thus make the debt situation sustainable. Other solutions which were suggested previously like bail-in (bondholders, banks and even big depositors) were not mentioned. Chairman Dijsselbloem avoided a direct answer on it when questioned by journalists. The statement on Greece was uneventful. The Eurogroup welcomed the conclusion of the MoU in February and a number of other initiatives. It asked Greek authorities to keep the reform momentum as precondition for further loan disbursements.

EU Commissioner Rehn said that the Ecofin may commit next month to giving Ireland and Portugal more time to repay bailout loans. Discussions on the subject will start at today’s Ecofin meeting. An agreement would facilitate the return of both countries to the markets. The main debate at the Ecofin meeting will be on the introduction of a Financial Transaction Tax. Especially the London has problems with this tax.