If Cyprus can't agree on a viable program for raising the funds, the ECB says it will cut off access to funding it provides Cypriot banks, The New York Times reported Thursday.
The ultimatum has darkened the mood in Cyprus, where lines have formed at automatic cash machines with depositors withdrawing funds as a safety measure, the Times said.
The first proposal for Cyprus to raise the funds was a tax on bank deposits. Banks were instructed to withdraw the appropriate amounts before depositors rushed to withdraw their money, but the first plan was overwhelmingly rejected by the country's 57 members of parliament.
That did not stop the private worries and anger among Cypriots is growing, the Times said.
In an attempt to diffuse the emotions in the island nation, Jeroen Dijsselbloem, the head of the European Union's finance ministers' group, said he took responsibility for fears spreading through Europe that bank accounts were in jeopardy.
"As the Eurogroup president, I will take responsibility," Dijsselbloem said at a European Parliament hearing.
Dijsselbloem said it should have been clear "right from the start," that the tax plan did not threaten bank accounts across the continent.
Cypriot lawmakers, meanwhile, were working out details on a plan to nationalize pension funds from state-run companies and to hold an emergency bond auction, the Times said.
But fears on the street were palpable. "Time is up – we want our cash," said accountant Maria Melitou standing near one of the four cash machines from the Laiki Bank and the Bank of Cyprus that were still operating Thursday.