In a radical departure from previous aid packages, euro zone finance ministers agreed on Saturday that Cyprus savers should forfeit up to 9.9 percent of their deposits in return for a 10 billion euro bailout to the island, which has been financially crippled by its exposure to neighboring Greece.
The decision, announced on Saturday morning, stunned Cypriots and caused a run on cash points. Electronic transfers were stopped.
"It was the position of the German government and the International Monetary Fund that we must get a considerable part of the funds that are necessary for restructuring the banks from the banks owners and creditors - that means the investors,» German Finance Minister Wolfgang Schaeuble told public broadcaster ARD in an interview.
"But we would obviously have respected the deposit guarantee for accounts up to 100,000,» he said. «But those who did not want a bail-in were the Cypriot government, also the European Commission and the ECB, they decided on this solution and they now must explain this to the Cypriot people."
Schaeuble said the Cypriot business model, of attracting capital with low taxes and favorable legal regulation, had proven to be unsustainable. But it had been «imperative in the interest of defending our common currency» to offer Cyprus aid.