Britannia Radio

For Cypriots trying to make sense of the past 10 days, the worst is yet to come.

While they may be staying in the euro for now, people on the island are lamenting the demise of an economy built on the banks that ended up sinking it. Cyprus sealed an agreement with creditors overnight that will shut one of its largest lenders in return for 10 billion euros ($13 billion) of aid.

“The problem is not solved and some bad things are going to happen in the next six months,” said Maria Philippou, 45, a civil servant in Nicosia and a mother of three. “The leaders are to blame in Cyprus and the European Union. They let the bankers do whatever they wanted.” 
http://www.businessweek.com/news/2013-03-25/cypriots-mourn-collapse-of-livelihoods-as-bailout-crushes-banks

Nobody Safe as EU Breaks Taboos to Save Cyprus

The devil lies in the detail of Cyprus’s salvation.

The island nation’s rescue sets precedents for the euro zone that may stick in the memory of depositors and bondholders alike as investors debate who will next fall victim to the debt crisis. Under the terms of the agreement struck yesterday in Brussels, senior Cypriot bank bond holders will take losses and uninsured depositors will be largely wiped out.

The message that stakeholders of all stripes can be coerced into helping a cash-strapped nation may make investors more skittish they’ll be targeted if Slovenia, Italy, Spain or even Greece again is next in line to need help. The risk is that bank runs and bond market selloffs become more likely the moment a country applies for a new rescue, said economists and academics from Nicosia to New York.

“We now have a new type of rule and everyone within the euro zone has to sit down and see what that implies for their own finances,” Nobel laureate Christopher Pissarides, an adviser to the Cypriot government, told “The Pulse” on Bloomberg Television. 
http://www.businessweek.com/news/2013-03-25/saving-cyprus-means-nobody-safe-as-europe-breaks-more-taboos