Product details

The Republic of Cyprus (Cyprus), a tiny divided island located in the Mediterranean Sea, became the 10th member of the European Union (EU) in 2004. Since the adoption of Euro as the official currency on January 1st 2008, Cyprus was successful in transforming itself into a service-based economy from an agriculture-based economy. Cyprus had a well-developed banking system controlled by Central Bank of Cyprus. According to experts, the downfall of Greece from the pinnacle of its economic activity had adversely impacted the banking system of Cyprus. Cyprus required €10 billion to assist its struggling banking system and public sector. On June 25th 2012, Cyprus became the fifth country after Greece, Ireland, Portugal, and Spain in the Eurozone to seek bailout. On the fallout of Cyprus, The International Monetary Fund (IMF) revealed that Cypriot banks had 152 billion euros of outstanding loans, a gigantic amount eight times higher than the size of Cyprus’ GDP. On November 23rd 2012, the European Commission, European Central Bank (ECB) and IMF (jointly known as a Troika), started formulating a loan deal with Cyprus. Troika, on March 16th 2013, agreed on a €10 billion bailout package for Cyprus with a rider that depositors / savers required to sacrifice at least 10% of their deposit held with the Cypriot banks. ECB informed Cyprus that it might discontinue the Emergency Liquidity Assistance to its banks. With such a move, on March 25th 2013, Cyprus agreed for a bailout deal with Troika in return to undertake massive restructuring measures in the banking system. How Cyprus would turnaround itself from such financial crisis in the future remained to be seen.