Merkel and Troika reject Cyprus’s ‘Plan B’

FXstreet.com (Barcelona) - Chancellor Angela Merkel told German lawmakers in the European morning that Cyprus’s proposition to nationalize pension funds in order to prop up its finances was unacceptable. She insisted that Cyprus should rather concentrate on debt sustainability and bank restructuring in order to secure a bailout. She also added that she would like the country to remain in the Eurozone.

Meanwhile, it is possible that the Troika has already rejected Cyprus’s proposition to create an investment solidarity fund, as a way to raise funds required to finalize the bailout negotiations. The EU, ECB and IMF are said to have objections as far as the nationalization of state pension funds is concerned as well as the use of revenues from the country's natural gas reserves as collateral.

According to a source close to the negotiations: “There was some discussion of going back to the original plan of a bank levy, but there are objections from the central bank.”

Cyprus government’s spokesman Christos Stylianides is due to make an official statement on the situation around noon local time.