Europe May Spare Cyprus's Small Savers from Bank Tax

To head off massive opposition

European policy makers signaled flexibility on the application of an unprecedented bank tax in Cyprus, seeking to overcome outrage that threatens to derail the nation's bailout. European shares and the euro fell.

While demanding that the levy raise the targeted 5.8 billion euros ($7.6 billion), finance officials said easing the cost to smaller savers was up to Cyprus. A vote on the tax, needed to secure 10 billion euros in rescue loans, was delayed for a second day until tomorrow. Banks may not reopen tomorrow after a holiday today, state-run broadcaster CYBC reported.

"If the government wants to change the structure of the solidarity levy for the banking sector, the government can decide as such," European Central Bank Executive Board member Joerg Asmussen said today in Berlin. "What's important is that the planned revenue of 5.8 billion euros remain."