Germany appears to ease up on Cyprus bailout demands

Germany is growing wary of saddling bank account holders with losses as part of a rescue for Cyprus and no longer insists on a financial contribution from the International Monetary Fund, a close ally of Chancellor Angela Merkel said on Tuesday.

Michael Meister, deputy parliamentary floor leader of Merkel’s Christian Democratic Union party, floated concessions that would hasten the wrap-up of nine months of aid talks and lessen the risk that a financial accident in Cyprus could revive European market turbulence.

Bank depositor losses would send a “false signal to financial markets that could destabilize Greece and retrigger turmoil in bond markets,” Meister said in a telephone interview in Berlin.

Taking money from account holders isn’t part of the “clearly marked series of steps” to deal with problem economies, he said.

[Bloomberg]