Tense talks between Cyprus and its international creditors on how the country can secure a 10 billion euro bailout were stuck Sunday due to disagreements over how to shrink the bloated Cypriot banking sector, an official said.
Without a deal by Monday night, the tiny Mediterranean island nation faces the prospect of a bankruptcy, which could force it to abandon the euro currency and spur turmoil in the 17-nation eurozone of 300 million people.
Nicosia is trying to find ways to raise 5.8 billion euros so that it can qualify for the 10 billion euro rescue loan package from the International Monetary Fund and the other eurozone countries. The European Central Bank has threatened to stop providing emergency funding to Cyprus' banks as of Tuesday if there is no agreement on how to raise that 5.8 billion euros.
With the clock ticking, Cypriot and European officials pursued a marathon negotiation in Brussels on Sunday, and the atmosphere was very tense.
The eurozone and the IMF are insisting that Cyprus implements a yet more radical restructuring of its banking sector that involves breaking up the nation's biggest financial institute, Bank of Cyprus, said the Cypriot official, who spoke on condition of anonymity because he wasn't allowed to divulge details from the closed-doors
Read more: Cyprus' bailout talks deadlocked
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