Cypriot banks will remain closed at least until Tuesday as negotiations between the country and Russia over financial assistance continue in Moscow.
Cyprus banks have been closed since Saturday to prevent a run on accounts after terms of a bailout called for a tax on bank deposits in return for receiving a 10 billion euro bailout from its euro zone partners. The country rejected the bank-deposit tax proposal on Tuesday.
The so-called troika of the European Commission, European Central Bank and International Monetary Fund is also set rejected Cyprus's "plan B" which proposed raiding the country's pension funds and turning them into government bonds to raise money to secure a bailout.
Cypriot finance minister Michael Sarris, meanwhile, is in Moscow for talks with Russian officials. He told CNBC that the country hoped to get some support from Russia, saying "The discussions will last as long as it takes. We will be here until we get some agreement."
The talks sparked a rumor that Cyprus had struck a deal to sell its Popular Bank to Russian investors, but a government spokesman denied such a deal.
"The government denies reports that the Cyprus Popular Bank has been sold to foreign investors," Christos Stylianides told Reuters in a statement, giving no further comment.
"It would make sense for the Russian banking system perhaps to to go in and sort out the Cypriot banks, why not if such a large amount of the deposits are Russian anyway? It provides a nice way out for Cyprus while relieving Europe of the obligation to rescue Cyprus," Edmund Shing, European Index Strategist at S&P/Dow Jones Indices, told CNBC.