Germany’s Constitutional Court held a public hearing on June 11 to probe whether an element of the European Central Bank (ECB) debt purchase programme – a key part of Portugal’s economy in the post-troika period – violates the German constitution.

If the Court rules that Outright Monetary Transactions (OMT) are unconstitutional, Portugal will lose access to a financial stream that is underwriting its return to the markets and avoiding a second bailout, writes the economic daily.

The OMT programme provides the ECB with the ability to backstop government bonds, in exchange for oversight and structural reforms.

The International Monetary Fund (IMF) report, which admitted "significant failures" in the handling of the Greek bailout in 2010 and the restructuring of its debt in 2012, has triggered "a war between Greece’s creditors," notes Ta Nea, the day after the document’s publication.

The European Commission has expressed its "fundamental disagreement" with the IMF conclusions, while the German government said that the terms of the rescue plan were correct.

The Athens daily writes that President of the European Central Bank (ECB) Mario Draghi has refused to admit that the ECB made any mistakes: "It is very difficult to make judgments on things that happened four years ago," the newspaper quoted Draghi as saying on June 6.

The International Monetary Fund (IMF) has admitted making "notable errors" in the design of the 2010 Greek bailout package and in the 2012 debt restructuring plan.

In a confidential document published on June 5 by the United States-based Wall Street Journal, the IMF makes the admission while also laying part of the responsibility at the door of the European Commission and the EU member states, who it claims were too optimistic about Greece's economic outlook.

The Greek bailout package should have been more substantial and should have included debt restructuring from 2010, the IMF now says.

The EU Commission approved Latvia's entry into the Eurozone as of January 1, 2014. The country has met the convergence criteria, the Commission says in a report published on June 5.

Latvian daily Diena reports, however, that

although the green light for Latvia to join the Eurozone was expected and is a mere formality, we need to remember that our society as a whole made many sacrifices to achieve this goal and that this report is, in a way, the ransom. [...] The only problem is that more and more critical voices are being heard questioning these same convergence criteria. It is possible that the figures for which we fought so hard will turn out to have been flawed.

The European Commission has further cleared the way for Latvia’s accession to the Eurozone. In a document published on June 5, it reports that the country "has achieved a high degree of sustainable economic convergence with the euro area.” It now rests with the Eurogroup ministers to give the country the final green light to become part of the currency bloc on January 1, 2014.

Latvia "fulfils all the criteria needed to adopt the euro," and "has made ​​the necessary legislative changes required to adopt the euro," says Diena. The Latvian daily adds that –

The average year on year inflation rate in Latvia in April was 1.3 per cent, which is well below the required 2.7 per cent level. [...] The budget deficit fell to 1.2 per cent of GDP in 2012 and is expected to be 1.2 per cent of GDP in 2013. [...] Public debt dropped to 40.7 per cent of GDP in 2012 and is expected to hit 40.1 per cent in 2014.

However, with a GDP per capita of $14,800 (€11,327), "the country is one of the poorest in the EU," notes Der Standard. But

experts in Brussels are focusing on the strong psychological and political signal that is sent out through the accession of a country that finds itself in such an [economic] situation. Since each member country is represented equally with a seat and a vote [in the Eurogroup], the culture of stability demanded by the northern countries is reinforced.

European Commissioner for Monetary Affairs Olli Rehn has proposed that the Commission should not seek to enforce a €760m fine on Belgium for its failure to respect a spending deficit limit of 3 per cent of GDP.

Belgium, which has exceeded the limit for three consecutive years has pledged to “cut its structural deficit to less than 1.2 per cent of GDP” by 2014, explains De Standaard. The newspaper also draws attention to the consequences of of the 2012 deficit, which exceeded forecasts. As a result —

… the country will have to make additional savings in 2014, which is an election year [...] It is the price that has to be paid.

The European Commission’s spring forecast projects Malta’s deficit will peak at 3.7 per cent in 2013, “1 per cent more than the government’s revised projection of 2.7 per cent, announced in the wake of the last general election”, writes The Malta Independent.

Brussels will therefore place “Malta under the excessive deficit procedure for two years,” reports the daily, quoting Finance Minister Edward Scicluna, before adding that —

the finance minister said that he tried to bring the Commission round by arguing that the country had been in election mode for months, resulting in less fiscal revenue. He explained how the Commission shunned this argument, as elections do not count as a ‘temporary economic shock,’ as defined by the EU treaty.

On May 29, the European Commission will cancel the excessive deficit procedure launched against Italy in 2009, even if its deficit has yet to be brought below 3 per cent of GDP.

Brussels chose to accept the government’s pledge to comply because “to reject Italy would have been politically wrong,” an insider source told La Stampa, adding that Rome was benefitting from “current mood of general flexibility that the EU is experiencing.”

The government can now use up to €12bn in national funds to stimulate growth and jobs, but it will have to satisfy the Commission’s demands for more flexibility in the labour market, less bureaucracy and a more dynamic attitude in its public sector.

Prime Minister Enrico Letta stressed that the good news would not eradicate concerns over the country’s dire financial situation, in which public debt is expected to hit 132.2 per cent of GDP in 2014.

“You can try as hard as you want, but the the new €5 banknote introduced on May 2 will not be accepted by vending machines”, reveals La Repubblica. The Italian daily’s reporters tried using the new “Europa series” banknotes in machines used to purchase tickets, consumer goods and other items in ten Italian cities, and discovered that the vast majority were unable to tell them from false money.

The new banknotes, explains La Repubblica, differ from the old ones not only for the look, but also for the optic reading stripe. As a result, over 100,000 of Italy’s machines will need to have their software updated, and owners will face a cost of 100 to 500 euros for each of them. However, many old models are obsolete and will have to be substituted with new ones, at a cost of up to €6,000 each.

To make thing worse, as the chairman of tobacco retailers association told the daily,

the new banknotes are not manufactured in a single facility, so the upgrade is being delayed to avoid small differences making them unreadable anyway. And when new €10 and €20 banknotes will be introduced, we will need to start over again.

But the banknotes chaos is minimal if compared to what would happen if the restyling was extended to brass, adds the chairman :

Two and a half million machines work with coins only. If they were to change, that would be the real disaster.

In an interview with Bild am Sonntag, Bundesbank President Jens Weidmann has “poured cold water on the European Central Bank’s timid economic stimulus policy,” notes La Vanguardia.

Weidmann argues that the ECB and France “are slacking in the fight against the causes of the crisis.” He is particularly critical of the reduction in interest rates decided by the ECB and the decision to allow France more time to meet its deficit targets.

The daily reports that, for his part, Mariano Rajoy has decided “to go on the offensive.” The Spanish Prime Minister is preparing for a June 5 meeting in Brussels in which he is hoping to convince the European Commission of the validity of his reforms.

The European Parliament will propose that deposits over €100,000, mainly held by companies, get to enjoy greater protection under the new bank resolution mechanism to be adopted by the European Union.

Jornal de Negócios says that the idea is that depositors will "only to be forced to take part in a rescue as a last resort, because they have more protection compared to bondholders."

The proposal will be presented at the Committee on Economic and Monetary Affairs next Monday, Negócios reveals, quoting a source in the European Parliament.

Negotiations will then take place within the European Council, where there is currently only a consensus about guaranteeing deposits of up to €100,000.

“Spain is under the European Union’s magnifying glass” states the Catalan daily, as the Spanish government tries to avoid being forced to take part in a new European Commission regulation system, as it struggles to implement economic reforms.

The “macroeconomic imbalances procedure” is designed to deal with the lagging competitiveness and overstretched banking systems that fuelled the debt crisis.

The procedure for Spain would include a host of new reforms that will be monitored periodically by inspection visits by EC experts. A decision on whether Spain will have to comply with the new procedure regulations will be announced on May 29.

German officials have criticised the policy of austerity and tax increases – the two economic tools favoured by the troika of international leaders – accusing the European Commission of incompetence and stiffness, reports the daily.

"Berlin considers tax increases to be a mistake, which penalises disadvantaged populations and kills economic growth," writes Público, without identifying its sources.

"Berlin’s irritation" is particularly aimed at the European Commission and its President José Manuel Barroso, which the newspaper says paradoxical, "as many of the austerity conditions applied to countries within the rescue programme are implicitly presented in Brussels as result of German demands."

According to the Finnish Finance Minister Jutta Urpilainen, “it was the Greeks who wanted to keep it secret”. However, the Finnish Supreme Administrative Court decided otherwise, and on May 14, the Government was forced to publish the terms of the contract it signed with Greece in 2012.

Under the agreement Athens pledged to provide financial collateral in exchange for a loan which formed part of the international bailout for the country.

The documents reveal that Finland and the Greece set up three bank accounts into which the money and financial securities used as collateral have since been deposited.

The matter had been referred to the court by the True Finns party and several media outlets, including Helsingin Sanomat. The daily is pleased with this “important and expected” decision —

It will strengthen the principle of the broadest possible implementation of transparency and publicity by government. The public has a right to be informed of all relevant official documents. [...] Helping the weak countries of the eurozone is a naturally difficult and controversial issue in Finland. Confidential documents will only serve to undermine confidence in decisions politicians have taken in the eurocrisis.

In the course of the eurozone crisis, Finland has stood out from among the eurozone states by demanding collateral from countries in difficulty as a condition for financial aid. The deal with Greece served as model for another deal concluded with Spain in July 2012.

“Eurozone finance ministers agreed to authorise the payment of a double tranche of aid to Greece worth €7.5bn at a meeting held in Brussels on May 13,” reports I Kathimerini.

“The first tranche of €4.2bn will be transferred on May 17, and the second is to follow in June,” notes the daily, which points out this payment will be conditional on an overhaul of Greece’s tax system, the liberalisation of certain professions and the reform of the country’s civil service.

The daily adds that “the European Commission reckons deficit targets for 2013 and 2014 will be met. However, it also believes that further efforts to the tune of €7.6bn will be required for 2015-2016.”

“British and American speculative funds are gambling on the recovery of Greek banks,” explains Der Standard, which points out that —

Hedge funds are once again buying bank shares and corporate bonds to take advantage of the high yields they offer.

Since June 2012, speculation on government bonds has netted them hundreds of millions of euros, adds the daily.

The Eurogroup approved the release of a €3bn tranche of aid to Cyprus at a meeting on May 13, of which €2bn was transferred on the same day. The third billion is to be delivered in June in the form of Treasury bills. The transfers are part of a €10bn bailout package, which was agreed in March.

In exchange for the release of funds, Phileleftheros reports that the Eurozone finance ministers have “demanded that Nicosia and the EU-ECB-IMF troika establish an action plan on the thorny issue” of money laundering. They are also insisting on the “rapid application of the adjustment programme” agreed by the Cypriot government with its creditors.

Meeting in Brussels on May 13, Eurozone finance ministers are expected to approve the first tranche of €3bn in aid for Cyprus. “Two billion euros will be transferred in mid-May, and a third billion at the end of June,” reports Politis.

The newspaper points out that of the €10bn stipulated in the memorandum of agreement with the EU-ECB-IMF troika of international creditors, “€9bn will be provided by the European Stability Mechanism and €1bn by the International Monetary Fund,” and adds that the IMF contribution “will have to be discussed and approved on May 15.”

“Eurogroup will also examine a report on money laundering in Cyprus,” reports the daily, which notes that —

… Finland and Slovakia have demanded that transfer of the tranche be subject to additional conditions focusing on laundering by Cypriot banks.

Meeting in Madrid on May 6, Spanish Prime Minister Mariano Rajoy and his Italian counterpart Enrico Letta agreed to "pressure" the EU to approve a youth unemployment plan at the European Council summit in June.

The two leaders also emphasised the need for new policies to combat populism and anti-European sentiment, which is increasingly prevalent in all EU countries.

La Vanguardia remarks that the "Italian-Spanish front is still alive", and eager to exert pressure on northern countries and German Chancellor Angela Merkel to proceed with the implementation of measures decided at the Rome summit in June 2012. These include the progressive introduction of a banking and budgetary union in the EU.

In an exclusive interview with the business daily, German Finance Minister Wolfgang Schäuble airs his views on the Brussels decision to allow Paris two more years in which to rein in its deficit to 3 per cent.

Pointing out that both “France and Germany have a special duty” with regard to Europe, he notes that the European Commission granted the extension on condition that there would be “a clear demonstration of commitment to necessary reforms.”

Schäuble also commented on the controversy triggered by an internal French Socialist Party document, which described Angela Markel as an “austerity chancellor” —

Instead of tackling the real causes of ongoing problems, some politicians prefer to hunt for scapegoats. It is a tendency that also exists in our country. But at the end of the day, what counts is what governments and peoples actually say. And both governments have clearly expressed the importance they attribute to Franco-German friendship.

“Mr Rajoy and the new Italian prime minister push for a European pact to promote growth,” writes the Catalan daily.

The new Italian PM, Enrico Letta, is today visiting Madrid as part of his European tour, after trips to Berlin, Paris and Brussels, in an effort to forge a strong front against Europe’s policy of austerity.

The visit comes ahead of Spanish PM Mariano Rajoy's Wednesday speech to the national parliament when he will outline the country’s new cost-cutting measures.

“The ECB cut its key interest rate from 0.75 per cent to five per cent,” on May 2, which as Die Presse points out, will bring interest rates “to a record low”. The newspaper adds that European Central Bank President Mario Draghi “has not ruled out further rate cuts” in the future.

The Viennese daily notes that the measure will be of benefit to Eurozone banks, which, “for at least a year, will be able to borrow as much as they want from the ECB under very favourable terms.”

But savers will be the losers, argues the newspaper —

The historic low in interest rates will have catastrophic consequences. Taking into account inflation and taxes […] savers are making a loss. Negative real interest rates caused Austrian savers to lose €10bn between 2010 and 2012.

European Central Bank (ECB) President Mario Draghi, announced on May 2 that the ECB’s key interest rate is to be cut from 0.75 per cent to the historic low of 0.5 per cent. However, this measure "will not be enough to generate growth in Spain," argues El Periódico.

The daily believes that the lower rate is a "necessary stimulus" but complains that it will not “facilitate access to credit for small and medium enterprises," which is vitally important for economic recovery.

The ECB also announced that it would continue to provide unlimited finance for banks until July 2014.

On April 30, the Cypriot parliament is expected to approve by a narrow majority the memorandum signed with the EU-ECB-IMF troika of international creditors and the corresponding agreement for €10bn which will “pave the way for the transfer of [financial] aid” in the coming days.

Only the Democratic Rally led by Nicos Anastasiades, the Democratic Party and the European Party, which control 29 to 30 of the 56 seats in parliament, are expected to vote in favour of the text.

Now that the Communist Party-supported possibility of an exit from the eurozone has been set aside, the troika agreement “is the only remaining option for Cyprus,” notes the daily.

In its World Economic Outlook for 2013, the International Monetary Fund predicts that the Eurozone will remain at the "epicentre" of the crisis, with a decline of 0.2 per cent of GDP.

The international organisation, which will prepare its spring meeting this week, believes that the US and emerging countries have overcome the crisis, while Europe continues to be hampered by major obstacles: in particular, low liquidity and the slow progress towards a banking union.

El País points out that the figure forecast for growth in Japan is also low, however, there is a "significant difference" with regard to Europe: “the Japanese government has just launched an aggressive plan for growth," while austerity continues "to call the tune" in Europe.

The much longed for banking union, which Europe’s member states want to establish so as to avoid another sovereign debt crisis, will in all likelihood be subject to more delay caused by cold feet in Berlin. Citing sources at the European Commission, Expansión writes that “Germany has reopened discussions on the deal on the creation of single supervisory authority to be based at the ECB” concluded last March between the European Council, the European Commission and the European Parliament. The matter is expected to be raised at the Eurogroup and ECOFIN meeting in Dublin on April 12-13. According to the Spanish financial daily —

Berlin is worried that the final text does not clearly separate the monetary policy and financial supervision functions of the European Central Bank.

As it stands, the new regulations cannot be approved until they are put to vote in the European Parliament in May. The daily points out that this will in turn delay the direct recapitalisation of banks by the European Stability Mechanism (ESM), which is urgently needed by Madrid. Expansión further notes —

that parliamentary sources have expressed concern over this state of affairs, because the [German] initiative could encourage other countries to renegotiate other points in the text, which they believe to be controversial.

On the eve of the Eurogroup meeting in Dublin on April 12-13, which will notably finalise the details of the Cypriot bailout, Greek President Nicos Anastasiades has written to Economic and Monetary Affairs Commissioner Olli Rehn to request additional financial assistance.

In spite of its harsh measures, the €17bn bailout adopted by the troika of the EU-ECB-IMF on March 25 will no longer be enough to mop up the Cypriot deficit.

The Mediterranean country now needs €23bn, of which €13bn will have to be found by the government in Nicosia.

The report on macroeconomic imbalances issued by the European Commission on April 10 underlines Italy’s “loss of competitiveness as well as high public indebtedness” while warning that the weakness of its bank sector still poses a contagion risk.

However, financial markets do not seem to share the Commission’s worries, notes Corriere della Sera, pointing to a bond auction on the same day which raised €11bn, while the Milan stock exchange rose by 3 per cent.

Despite the political deadlock, the outgoing government of Mario Monti managed to pass an economic growth law, with the prime minister stating that “Italy’s public finances are back on a sustainable path.”

According to the European Commission’s report on the economies of Eurozone states, published on April 10, Malta is not facing an immediate risk of a banking crisis similar to the one that struck Cyprus](3587751).

“The property market’s rapid development and its dependence on large bank loans seem to be the main concern,” writes the Times of Malta.

However, the daily also points out that the Commission figures indicate —

Government debt amounted to 70.4 per cent of GDP in 2011, up from 60.9 per cent when Malta adopted the euro in 2008. While commending the progress made in past years to lower the country’s deficit, the Commission reiterates the need for rapid reforms in the healthcare and pension sectors as these are putting the long-term sustainability of Malta’s public finances at risks.

After Cyprus, will the next victim of the banking crisis be Slovenia, as has been feared for several months? While the situation of the Slovenian banks is indeed worrisome, “the OECD and the European Commission are optimistic” about the ability of Ljubljana to resolve the question by itself, leads Večer – and this despite a negative growth forecast of – 2.1 per cent for 2013.

Slovenia, adds the Maribor daily

needs no urgent aid from the euro area, but it must carry out structural reforms in time, the OECD insisted yesterday, presenting its Economic Survey on Slovenia. While in its first report back in 2011 the OECD had focused on education reform, this time around, however, it zeros in on the Slovenian banking system and the restructuring of the welfare state.

The Financial Times, less reassuringly, does not hesitate to compare the country to Cyprus –

Just as in the Cypriot case, Slovenia’s troubles originate in its wobbling banking sector. The former communist country never fully privatised its lenders. These took excessive risks and gave preferential treatment to other state-owned companies. The recession exposed the limits of the cosy ties between politics and banking. Non-performing loans have jumped to 14 per cent of the banks’ portfolios, or about €7bn. Alenka Bratusek, the prime minister, insists that the comparison between her country and Cyprus is unfair. She has a point. The size of the Slovene banking system is 1.4 times bigger than gross domestic product. While large, this is well below Cyprus, where bank assets were above 700 per cent of GDP. Slovenia’s debt is rising, but is significantly below Cypriot levels.

In the panorama of “small economies weakened by the crisis”, such as Malta, the Latvia and Luxembourg, listed by the Swiss newspaper Le Temps, “Slovenia remains the most pressing case” –

In the wake of the Cypriot crisis, the cost of borrowing for Slovenian government bonds climbed to almost 7 per cent on 28 March. The country needs nearly €1bn by June to honour its maturing debt. […] Under the direction of Alenka Bratušek, the new government is tackling the banking problem head-on. It has announced the recapitalisation of the banks and the creation of a “bad bank” defeasance structure to host the toxic debts, estimated at €7bn, which should start to operate as early as June.

“Measures against tax havens and tax evasion are on the agenda. Austria is expected to align itself with Switzerland and Luxembourg, whose minister of finance has stated that he is ready to make concessions on banking secrecy. Austria should participate in talks on banking secrecy,” Austrian Chancellor Werner Faymann declared to the daily.

European pressure on Austria over this issue has “prompted highly charged debates in the country,” remarks Die Presse.

Faymann’s declaration directly contradicts remarks made a few days ago by Finance Minister Maria Fekter, who insisted that Austria “would not give one millimetre” on the issue of banking secrecy.

Cypriot banks finally reopened on March 28 after 12 days of closures following the Cypriot banking crisis.

In contrast to fears of massive withdrawals and trouble, the queues of bank customers remained calm.

“Those who waited in line did so with dignity, calm, patience, self-confidence and hope. Yesterday, the people queueing showed strength, kindness, and confidence,” reports the daily enthusiastically.

In Cyprus, “a beautiful island and a true people have never had rulers that genuinely represent them and really fight for them,” complains the newspaper.

The Cyprus bailout package, is "difficult, painful and chaotic for Europe," says the Vienna daily, but adds that there is reason for "a little optimism: the euro works."

The deficit of the eurozone countries has gone from 4.5 per cent of GDP in 2009 to about 2.1 per cent in 2012. Having searched for a means to overcome the crisis, the EU is now finding its way —

Whereas before the heads of government of Italy, Greece and Cyprus followed the model of "invisible expropriation" their successors are now being forced to own up to their mistakes and begin (painful) reforms. The single currency [...] has drawn the people's attention to the errors committed by political elites.

Cypriot banks are scheduled to open on March 28 at noon local time, after being shut for 12 days while a bailout plan for Cyprus was devised. "Special security measures were taken" to avoid a bank run, the paper says, adding that —

because the banking sector must confront extraordinary circumstances, temporary measures have been adopted to regulate capital flows in the Republic. [...] All payments and transactions authorised since March 15 will be completed, but cheques will no longer be accepted. Each client will be allowed to withdraw €300 per day from his bank.

“For Russian businessmen and savers seeking a new bridgehead in the eurozone, Latvia is an ideal choice,” writes Martin Ehl in Hospodářské noviny. The political analyst reminds the newspaper’s readers that the country, which has been dubbed a post-Soviet Switzerland, is home to a large Russian minority [27 per cent of the population] and a dynamic banking sector. It is also set to join the eurozone on January 1, 2014.”

Ehl continues—

Non residents’ deposits represent €10bn, which is equivalent — as it is for Switzerland — to 60 per cent of all deposits in the country. Reforms adopted in response to the crisis in 2009 have reduced the weight of the banking sector in the Latvian economy, at the same time, in contrast to Cyprus, banking supervision was also reinforced. […] According to unofficial sources, certain transactions emanating from Cyprus have already been refused, because they did not comply with anti-money laundering regulations.

To calm fears that Latvia might suffer the same fate as Cyprus, the day after the agreement, Latvian Prime Minister Valdis Dombrovskis remarked on his Twitter account that “Latvia will not make any particular effort to attract Cypriot deposits. The country believes that business with foreign economies is highly risky, and that is why it has been strictly regulated.”

However, adds Ehl, “Russian savers and oligarchs will certainly see a greater role for Latvia as a financial link to the European Union, because once the country has joined the eurozone, it will form part of the core of the currency bloc, unlike the Mediterranean countries which have been stricken by the crisis.”

As a result of the March 25 agreement on the Cypriot bailout, "Cyprus could definitively lose its role as an offshore financial centre," writes the Moscow daily.

Certainly, it will be viewed negatively by the "large number of Russian investors who will be affected" by the 30 to 50 per cent haircut on Bank of Cyprus deposits.

Russian Prime Minister Dmitri Medvedev has declared that "stealing continues" in Cyprus, while President Vladimir Putin has asked his government to negotiate a restructuring of the €2.5bn loan Moscow granted to the island in 2011.

The Spanish daily has harsh words for the President of Eurogroup who prompted a slump in European markets and a spike in risk premiums for countries such as Spain and Italy on March 25.

In an interview with Reuters and the Financial Times, the Netherlands’ Jeroen Dijsselbloem confirmed that the example of Cyprus, where savers with deposits of more than €100,000 will be forced to take a haircut, could apply in other countries that requested bailouts. However, he later went back on this suggestion.

Nonetheless, El Mundo argues that in his bid to follow a path mapped out by German Chancellor Angela Merkel, Dijsselbloem has sent “a lethal message" for the security of savers in the Eurozone.

“EU finance ministers have approved a multi-billion euro bailout, while the island is to cut a slice from bank deposits of more than €100,000,” writes the daily in its report on the Eurogroup plan adopted on March 25.

However, the newspaper also notes that “the single currency can only look forward to a brief respite. In the long term, the euro will suffer from a fundamental lack of confidence.”

In its editorial, Die Tageszeitung argues that “monetary union is now a thing of the past.” Given that deposits in countries in difficulty are no longer as secure as they are in Germany or the Netherlands, we have reached a point where “there is one official euro, but in practice, there are 17 different euros.”

The bailout agreement concluded by Cyprus and the troika of international lenders (the EU, ECB and IMF) at dawn on March 25 stipulates, among other measures, that the island’s largest bank, the Bank of Cyprus, will take on the debts of Laiki Bank, which is to be liquidated.

To date, Laiki, which is the country’s second biggest credit institution, has received €9.2bn in loans that will now have to be paid back to the ECB.

The newspaper also reports that Cypriot banks, which closed on March 16 to avoid a bank run, will not open until March 28. Cash machines on the island are still functioning, however, depending on the bank, withdrawals are limited to €100 or €200 per person and per day.

The EU’s €10bn rescue deal agreed with Cyprus marked a “watershed” in the way the Eurozone would handle failing banks, wrote the economic daily following comments by Jeroen Dijsselbloem, president of the Eurogroup.

Quoting Mr Dijsselbloem, the paper said: “European leaders [are] now committed to ‘pushing back the risks’ of paying for bank bailouts from taxpayers to private investors.”