White House 'closely monitoring' Cyprus bailout effort

The Obama administration is closely watching Cyprus’s effort to tax bank deposits in the island nation in exchange for a $13 billion bailout, the White House said Monday.

The banking system in Cyprus is reportedly on the verge of collapse, delayed a vote on the highly controversial bailout amid widespread protests.

“We are monitoring this closely, as you would imagine, but that our overall approach has been to support a strong, stable Europe, because it's in the interests not just of Europe, but in the United States,” Carney said Monday.

Carney sidestepped questions about the effects the tumult in Cyprus might have on international markets.

“I'm not going to comment on markets,” Carney said. “You might see if Treasury officials will comment on them. I would simply say that we have long said that a strong stable Europe is in the interests of the United States.”

The Treasury Department urged European officials Monday to come to a "responsible and fair" resolution.

In a statement, the department said it was monitoring the situation closely and that Treasury Secretary Jack Lew was discussing the matter with his European counterparts.

"It is important that Cyprus and its Euro area partners work to resolve the situation in a way that is responsible and fair and ensures financial stability," the department said.

European stock markets and the euro fell sharply Monday on news of the bailout, with the European currency falling to a three-month low against the dollar.

The White House spokesman also declined to answer when asked generally if the White House had a general reaction to the Cyprus plan, under which the government would take 9.9 percent from all deposits in the nation's banks. The unorthodox move would have implications far beyond the Cyproit shores; some experts estimate up to a third of deposits in the nation's banks are from Russian citizens.

“I can't. I think that it is the wise course to defer to the Treasury Department,” Carney said.

This post updated at 3:04pm.