(NEW YORK) — Cyprus has seemingly avoided economic disaster by agreeing late Sunday to a bailout plan which will provide the island nation with a bailout of approximately $13 billion.
Time was of the essence, as failing to reach an agreement could have spelled the collapse of Cyprus’ banking system, leading next to bankruptcy, with a potential ripple effect throughout the entire European continent.
Last week, the Cypriot parliament roundly rejected the first proposal from the European Union and International Monetary Fund, which would have tacked surcharges of up to ten percent on virtually all bank accounts.
The new deal calls for shrinking the banking system, in fact, the Cyprus Popular Bank will be shut down and viable assets taken over by the Bank of Cyprus.
To help pay for the bailout, bank depositors with more than 100,000 euros will endure losses while those under that amount will be protected.
If lawmakers approve the plan, it will mean immediate pain for Cypriots and the likely end of their country as an offshore tax haven.
Copyright 2013 ABC News Radio
Scott Zamost and Drew Griffin, CNN Newswire
Brian Stelter, CNN Newswire