Cyprus's president said Tuesday that without a controversial haircut on bank deposits to secure an international bailout, the island would have found itself bankrupt and out of the eurozone.
Nicos Anastasiades told a public enquiry into the causes of the island's financial crisis that when took office in February he was caught between a rock and a hard place.
He either had to accept an unprecedented haircut on bank deposits - during a eurogroup meeting in March -- or allow the island's two biggest banks to fold.
"I found myself with the dilemma to either say a heroic 'no' for a few 24 hours or take responsibility at a political cost," said Anastasiades.
"I measured the consequences of a possible collapse of the two banks and a bankrupt state. They (eurogroup) threatened to stop providing liquidity to our banks. If this happened it would have meant a disorderly default of the state."
He said the banks owed a total of 11.4 billion euros in Emergency Liquidity Assistance, while the government would have had to pay 19 billion euros in compensation to those who lost their savings (as deposits under 100,000 are secured).
"A collapse of the two banks would lead to 6,000 unemployed and thousands of small businesses going bust and the danger of Cyprus leaving the euro and the EU," he said.
Following the delaying tactics of his predecessor, communist leader Demetris Christofias, Anastasiades had to sign a 23 billion euro bail-in/bailout package.
In return for a 10 billion-euro loan as part of that package, international creditors demanded the winding up of the island's second-largest banker, Laiki, and a haircut on deposits over 100,000 euros in largest lender Bank of Cyprus.
Cyprus is suffering an unprecedented recession, with GDP expected to plunge nine percent this year and with unemployment at a record 17 percent.