Cyprus tries to produce plan B as banks remain closed

That could hammer global financial markets as well as endanger deposits in the country even further.

Meanwhile banks remained shut for the third day running to avoid a run, and there were growing expectations they may not reopen until next week.

A government spokesman said a meeting was under way at the central bank to discuss an alternative plan for raising funds, but also for reducing the €5.8bn that must be found domestically.

President Nicos Anastasiades was also meeting the representatives of his country’s potential creditors – the International Monetary Fund, European Central Bank and European Commission.

The three, collectively known as the troika, must sign off on any Plan B the Cypriots come up with if it is to be approved as part of the bailout.

Under the initial plan conceived in Brussels last weekend, other eurozone countries and the IMF would give Cyprus €10bn in rescue loans if the country raised €5.8bn through a bank deposit seizure.

The bank’s deputy governor, Spyros Stavrinakis, said no decision had been taken on when banks, which have been shut since the weekend, would reopen, and that a new plan has not yet been presented to the country’s euro partners and IMF.

The package must also win approval from politicians.

In a two-pronged approach to the crisis, finance minister Michalis Sarris was in Moscow for meetings with his Russian counterpart.

Russia could play a key role in any alternative package that may emerge. Russians are believed to account for just under a third of Cyprus’s €68bn bank deposits.

“We will be here until some kind of agreement is reached,” Mr Sarris said.

In Nicosia, residents waited anxiously to see what lay in store for them.

Avetis Bahcecian has been running a restaurant in Nicosia for years. Now, with the uncertainty swirling around Cyprus, he is worried.

“Whatever they do, they have to do it quickly because this uncertainty is hurting business,” the 41-year-old said. "Our business is down by 40% in the last couple days.“

ATMs have been dispensing cash and debit and credit cards have been working, so Cypriots have not faced any immediate cash shortage for day-to-day living.

A Cypriot financial official said authorities were working on bills which would need parliamentary approval aiming to limit the amount of money leaving the country.

A government official said an alternative plan to raise the €5.8bn had been drafted and was to be presented to the troika. It would raise money from domestic sources, including pension plans and subsidiaries of foreign banks active in Cyprus.

One of those domestic sources may be the country’s influential Orthodox church.

Its head, Archbishop Chrysostomos II, said he would put the church’s assets at the country’s disposal, saying it was willing to mortgage its assets to invest in government bonds. The church has considerable wealth, including property, stakes in a bank and a brewery.

“The wealth of the church is at the disposal of the country,” Chrysostomos said.