The Impact of the Cypriot (cyprus) Banking Crisis on the European Economy

The impact of the Cypriot (Cyprus) banking crisis on the European economy»

As a result of the global and European systemic economic crisis, Cyprus has found itself gradually sinking into its own economic depression.

The Republic of Cyprus joined the European Union in 2004 and then joined the Eurozone in 2008. Due to the financial crisis that started adversely affecting both the financial stability of the region and the Euro itself around that time. For a while, Cyprus was riding out the crisis quite well. It suffered less severe adverse effects than the rest of the Eurozone up until 2012. Unfortunately, Cyprus shares not only strong cultural ties to Greece but strong financial ties as well. But Cyprus is a large holder of Greek government and corporate bonds, so the sharp decline in the value of those assets had a negative impact on Cyprus banks. Actually, Cyprus was essentially pushed towards needing a bailout itself because the value of Greek debt was written down as the bailout deal for Greece. Cyprus Popular Bank and The Bank of Cyprus, two of the main financial institutions in the country, couldn't withstand their losses and requested help from the Cypriot government. Unfortunately, this didn't solve the problem. Therefore, the Cypriot government moved the problem up by asking the European Central Bank, the European Commission, and the International Monetary Fund for help. The problem was that Cyprus’s two biggest banks couldn’t manage the flood of deposits.

The reaction of Germany on Cyprus banking crisis.

In one German newspaper wrote about it: The Cypriots may see themselves as victims, but their European partners aren't to blame for the mess. The case of Cyprus shows how rife alienation and anger are among Europeans: Many in the crisis-hit nations are blaming their plight not on their own corrupt elites or bad governance but on supposedly unsympathetic EU governments, meaning the supposedly Germans. The donor countries in turn feel they are the victims of blackmail who are rewarded for their help with insults. At the start of the fourth year of the debt and euro crisis, one can't help but register that trust and empathy have been eroded along the way. It doesn't inspire hope for the future of the EU.