Howard Schneider
May 10, 2013

Cyprus seriously considered dropping out of the euro zone at the peak of its financial crisis in March as it faced a standoff over the terms of an international bailout, Cyprus Foreign Minister Ioannis Kasoulides said in an interview in Washington on Thursday.

The country’s leaders discussed severing ties with the 17-nation currency union for “24 to 48 hours,” after the parliament rejected an initial bailout plan, throwing the country’s economic future into doubt, Kasoulides said. “It was an internal reflection” about how the country should proceed, he said. “We had to think of all the plans B or C that existed.”

The exit idea was shelved after it was estimated that reinstating the Cypriot pound would have caused an immediate 40 percent drop in the value of the new currency, devastating a small island that relies heavily on imports.

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