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So, for the sake of saving 6.5 billion Euros on a loan, the ECB is willing to destroy confidence in the deposit insurance system, possibly the most valuable tool that savings and loan banks possess. The truly lunatic thing about this is that Cyprus has a revenue stream coming in 2017, with their new gas fields. It's not a risky loan in any way.
Cyprus forms 0.2% of the EZ economy. Keeping them in the EZ is basically a matter of prestige, rather than having any practical component anyway. One now has to wonder just how much the rule of law will mean in the EU going forward, since this move explicitly breaks both the laws about depositors' insurance, as well as those forbidding capital flow controls between EU countries.
Cyprus forms 0.2% of the EZ economy. Keeping them in the EZ is basically a matter of prestige, rather than having any practical component anyway. One now has to wonder just how much the rule of law will mean in the EU going forward, since this move explicitly breaks both the laws about depositors' insurance, as well as those forbidding capital flow controls between EU countries.
