The European Central Bank (ECB) will withdraw emergency funding from Cyprus on Monday if a rescue package for the Cypriot banks has not been agreed.

In a statement the body says "The Governing Council of the European Central Bank decided to maintain the current level of Emergency Liquidity Assistance (ELA) until Monday, 25 March 2013". "Thereafter, Emergency Liquidity Assistance (ELA) could only be considered if an EU-IMF programme is in place that would ensure the solvency of the concerned banks".

Markets are keeping a close watch on Cyprus after lawmakers voted against a controversial plan to tax bank deposits as part of a bailout package. A decision will be taken today on a newly drawn-up plan aimed at securing a rescue package for the near-bankrupt Eurozone member.

"Systemic risk" to the Eurozone

The head of the Eurogroup Jeroen Dijsselbloem has said the Cyprus debt crisis poses a "systemic risk" that threatens to ricochet right through the Eurozone.

The Dutch Finance Minister made the comment during a European Parliament hearing in which he said that the Cypriot banking model needs a total overhaul.

Referring to "worries about the stability of the Eurozone" he said the "present situation (was) definitely a systemic risk - the unrest of the last couple of days has proven this."

Newstalk's Business Editor Ian Guider says the ECB deadline is a heavy-handed tactic by the bank.