ECB’s Asmussen says no liquidity for Cypriot banks without recapitalization

Banks in Cyprus are not solvent without them being quickly recapitalised, and the European Central Bank can only provide liquidity to solvent banks, ECB Executive Board member Joerg Asmussen was quoted as saying on Wednesday.

The ECB said on Tuesday, after Cypriot lawmakers overwhelmingly rejected a key element of a proposed bailout, that it remained committed to providing liquidity within the existing rules.

“We did not threaten (to cut off liquidity), but just pointed out as a matter of fact that we can provide emergency liquidity only to solvent banks and that the solvency of Cypriot banks cannot be assumed if an aid programme is not agreed on soon, which would allow for a quick recapitalisation of the banking sector,» Asmussen told German weekly Die Zeit in an interview conducted Tuesday evening.

He was also quoted as saying that no other country in the euro zone had a banking sector crisis comparable to Cyprus.


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