Cyprus’s Financial Crisis and the Threat to the Euro

This essay analyzes Cyprus’s financial crisis and its potential threat to the eurozone. The focus is on the economic consequences of the terms of the bailout agreement dictated by the Troika or Eurogroup for the Cyprus economy as well as its significance for any future bailouts. Given the insignificant size of the Cypriot economy for the eurozone as a whole, the Cyprus case was treated more as a political exercise and held up as an example for other eurozone members rather than seen as a serious economic threat, while little attention was given to its potential as a precedent for future bailouts.