German Chancellor Angela Merkel said on Wednesday she regretted that the Cypriot parliament had rejected the terms of a European bailout and said the island's partners were now awaiting a new proposal from the Cypriot government.
"I regret the vote of the parliament yesterday. But of course we respect it and will now look to see what proposals Cyprus makes to the troika, Merkel said after attending a meeting of the European affairs committee of parliament.
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"From a political point of view, I say that Cyprus needs a sustainable banking sector. Today's banking sector is not sustainable," she added.
"We will continue negotiations, primarily via the troika. We will look at any proposals Cyprus makes with respect. Germany wants a solution."
(Reporting by Annika Breidthardt and Klaus-Peter Senger; writing by Alexandra Hudson; editing by Noah Barkin)