Eurozone finance ministers pledged on Monday to agree a bailout for Cyprus by the end of March. The total bailout could be up to €17 billion.
The Eurogroup said that while Europe is ready to help the island, details on how the potential rescue will be financed are yet to be worked out.
'The first exchanges with the new Cypriot government have been useful. With the new government now in place in Cyprus, the Eurogroup is confident that a swift conclusion of the negotiations towards a Memorandum of Understanding can be reached', said Eurogroup's president Jeroen Dijsselbloem.
Cyprus already requested a bailout earlier last June. But the former communist-led government failed to reach an agreement.
Newly elected President, center-right Nicos Anastasiades, was sworn into office on March 1 after he promised to secure financial assistance for the country.
'The Eurogroup welcomes the commitment of President Anastasiades, reiterated by Minister Sarris, to closely cooperate with Cyprus's European partners towards the earliest possible completion of the loan agreement', said Eurogroup's president Jeroen Dijsselbloem.
Talks on Monday focused mainly on how to fund a potential bailout for the island. Germany is pushing for a 'bail-in', which would involve depositors in Cypriot banks, mainly Brits and Russians, to help pay the cost of the rescue.
But Nicosia believes a 'bail-in' could cause a rapid withdrawal of funds from the island.
'The forecast shows that the necessary rebalancing process after the credit boom and after the increase of public and private debt we will continue to way on down on public finances for some time to come still. This justifies the differenced approach to fiscal consolidation that the Commission is pursuing. It may also justify in a set of numbers of cases reviewing deadlines for the correction of excessive deficit in line also with the stability and the growth pack', said EU commissioner for Economic and Monetary Affairs Olli Rehn.
The final decision on Cyprus is likely to come at an extraordinary meeting of the ministers later in March.