The Cyprus Bailout - Is the European Zone Failing?
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Code : ECC0055
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Region : Cyprus, Greece, Europe, Euro-Zone |
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Introduction The European Union slowdown had its latest fallout in the form of the collapse of Cyprus in March 2013. The tiny island in the Mediterranean Sea became the epicenter of the latest round of euro-angst after its “too big to save banks” failed. On the brink of a banking system failure, the banks, Cyprus Popular Bank (also known as Laiki Bank – Laiki being the Greek word for Popular) and Bank of Cyprus were abruptly closed down on March 15, 2013 . Before the European financial crisis struck in 2008, Cyprus was reported to have a healthy economy with high growth, low unemployment, and sound public finances . When Greece became engulfed in the crisis in 2010, the Greek government as part of its bail-out deal with the European Stability Mechanism (ESM) had to write down its debt. Cyprus's two largest banks – the Bank of Cyprus and the Laiki Bank – were both heavily impacted by the Greek financial crisis through exposures to their own operations in Greece and to Greek sovereign debt, which destroyed their balance sheets... |
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