German Chancellor Angela Merkel said Wednesday the eurozone had a "duty" to work with Cyprus to resolve the debt-mired island's banking crisis.
"Cyprus is our partner in the euro area and that is why it is our duty to find a solution together," Merkel told reporters after talks with German lawmakers.
"I regret the vote of the Cypriot parliament yesterday but of course we respect this vote. Now we are waiting to see what proposals Cyprus makes to the troika," she added, referring to the group of international creditors.
Cyprus was scrambling to secure funding for its banks after lawmakers on Tuesday rejected the terms of an EU bailout deal.
The highly unpopular measure would have slapped a one-time levy of up to 9.9 percent on bank deposits as a condition for an EU-led 10-billion-euro ($13-billion) loan.
The 5.8 billion euros the proposal would have raised was crucial to Nicosia getting the full rescue. With that now in doubt, Cyprus must find other ways to raise cash to repay its debts.
"Speaking politically, I must say it is important that Cyprus gets a sustainable banking sector in future. The current banking sector is not sustainable," Merkel said.
The German leader said Cyprus's financing needs of around 17 billion euros were "unprecedented".
She said that while the banking sector should stump up part of Cyprus's share of the bailout, she noted that eurozone finance ministers do not support drawing a contribution from depositors with less than 100,000 euros in their accounts.