A vote on a bailout package for Cyprus that includes an immediate tax on all savings accounts has been postponed until Tuesday evening.
Yiannakis Omirou, the speaker of Parliament, said the delay was needed to give the government time to amend the deal reached over the weekend that prompted an outcry from those who thought their money was safe.
In order to get Euro 10 billion ($13 billion) in bailout loans from international creditors, Cyprus agreed to take a per centage of all deposits - including ordinary citizens' savings - an unprecedented step in Europe's three-and-a-half-year debt crisis.
The news was a big surprise and stoked fears that deposits in other countries could be targeted. Shares around the world and the euro took a pounding Monday even though the Cypriot economy accounts for only 0.2 per cent of the combined output of the 17 European Union countries that use the euro.
"The damage is done," said Louise Cooper of CooperCity. "Europeans now know that their savings could be used to bailout banks."
The Cypriot government is now trying to modify the terms of the original deal and in particular to get a better deal for small savers with less than Euro 100,000. The weekend deal foresaw a one-off levy of 6.75 per cent on those savings, rising to 9.9 per cent for those above the Euro 100,000 mark.
Lawmakers in Nicosia are considering how to amend the deal without reducing the total Euro 5.8 billion earmarked to be raised through the measure. One solution doing the rounds is to make the tax more graduated: placing a one-time 3 per cent levy on deposits below Euro 100,000, rising to 15 per cent for those above Euro 500,000.
Still, the government has a battle to get a majority in the 56-member Parliament - a scenario that could cripple the Cypriot economy.
Some 25 lawmakers from communist AKEL, socialist EDEK and the Green party have said they would vote down the levy that they had criticised as disastrous.
Any modification must be approved by the other eurozone finance ministers before the Cypriot parliament can vote on it.
"I believe (the levy) was a bad idea but they imposed it on us," Cypriot Finance Minister Michalis Sarris told reporters in Parliament on Monday. Sarris said the levy was the least worst option since the country's euro area partners had insisted on a much larger savings cut.
Cyprus' banks were closed on Monday for a scheduled public holiday.