ECB Says It Will Provide Liquidity To Cyprus

The euro and the S&P 500 just jumped on headlines (via Bloomberg) that the ECB will provide liquidity to Cyprus within the existing rules governing the central bank.

The ECB also noted that it was in contact with its "troika" partners (the EU and IMF) regarding the decision today in the Cypriot parliament not to pass the controversial Cyprus bank bailout deal hatched with the EU over the weekend.

The meaning of the specification "within existing rules" is unclear, but it could refer to the ECB's Emergency Liquidity Assistance program, the last recourse for banks in the Eurosystem. (Many now fear a full-blown run on Cypriot banks when they finally re-open.)

The announcement from the ECB was not a big surprise, but many have awaited the central bank's response to the Cyprus situation for obvious reasons.