BRUSSELS–Eurozone finance officials acknowledged being “in a mess” over Cyprus during a conference call on Wednesday and discussed imposing capital controls to insulate the region from a possible collapse of the Cypriot economy. In detailed notes of the call seen by Reuters, one official described emotions as running “very high,” making it difficult to come up with rational solutions, and referred to “open talk in regards of (Cyprus) leaving the eurozone.” The call was among members of the Eurogroup Working Group, which consists of deputy finance ministers or senior treasury officials from the 17 eurozone countries as well as representatives from the European Central Bank and the European Commission.
Cyprus decided not to take part in the call, a decision that several participants described as troubling. The German representative raised the need to learn more about capital outflows from Cyprus to Russia and Britain, and emphasized that “we stand ready to find a solution immediately” as long as the parameters of the bailout agreed among eurozone finance ministers on Saturday are respected. In the event of an exit, the official said steps needed to be taken to “ring-fence” the rest of the eurozone from the impact. One issue repeatedly raised on the call was the risk of large outflows of capital once Cypriot banks reopen, probably on Tuesday. The ECB representative said the situation was being closely monitored and “technical preparations” were being made to try to limit the amount of any outflow.