Cyprus is the latest euro zone country on the brink of bankruptcy, and to little surprise, the German parliament voted in overwhelming favor for bailing out the struggling country. 487 out of the 601 present German lawmakers voted in favor of the bailout which will see Germany covering a third of the 10 billion euros going to help Cyprus. Under the deal, Cyprus agreed to face large losses on depositors, close its second largest bank, and increase their corporate tax rate.
Also in this newly approved deal is a clause that backs a loan extension for 7 years to recent bailout recipients Portugal and Ireland.
In an effort to reassure German parliament members that a yes vote on the bailout would be beneficial, German Finance Minister Wolfgang Schaeuble spoke before the vote to highlight the supposed success that previous measures had on the euro zone.
Schaeuble stated “Step by step we are winning back confidence. If you look at the markets, there is still nervousness and uncertainty. But it is considerably less than three years, two years or one year ago… The aid for Cyprus secures the successes we’ve already achieved in the euro zone. We must prevent the problems in Cyprus from unleashing new problems in other euro zone countries.”
Photo (c) Deutscher Bundestag / Marc-Steffen Unger