Cyprus's biggest lender Bank of Cyprus on Friday urged the government to immediately adopt the euro zone's proposal to tax deposits over 100,000 euros, saying the alternative was a collapse of the country's banking system.

"Since it was evident that there were no alternative solutions there must be no further delay in adopting the Eurogroup's proposal," the bank said in a statement, warning that all deposits would be lost if the system collapsed.

"And finally, we want to highlight that any return to the Cypriot pound means significant loss of asset value and lead to a vicious circle of devaluation and hyperinflation."

(Writing by Deepa Babington, editing by Renee Maltezou)