As a Cypriot bailout deal has been agreed, a package of bank restructuring and deposit levies, things are not looking good for the islanders. The BBC's Robert Peston summarises two huge threats to the small economy:
- An economy that will be starved of credit, and will therefore shrink rapidly and very painfully for citizens.
- An economy whose main industry, offshore banking, is being shut.
Whatever recovery can follow will be painful and could be compounded further by the addition of capital controls.
Biggest impact of #Cyprus bailout deal, imo, will be on trust between voters and politics, more so than the economics of it all.— Alberto Nardelli (@AlbertoNardelli) March 25, 2013
I think the phrase “worse than a crime, a mistake” was invented with the eurozone in mind.— Matt Yglesias (@mattyglesias) March 20, 2013