Financial Risks

The Governor of Central Bank of Cyprus Panicos Demetriades said in a press conference "a superhuman effort" is being made for the banks to open on March 28 and he also confirmed that a so-called haircut or levy on deposits over 100,000 euros ($130,000) at the stricken Bank of Cyprus and Laiki Bank would be 'around 40 percent.' Photo: AFP

Cyprus' bailout marks a turning point

What has set Cyprus apart is that it is one of the smallest members of the euro zone, with a failed banking system much bigger than its economy. Likewise, the €10 billion (HK$101 billion) rescue deal with international lenders, though more than half its GDP, is small change compared with the hundreds of billions in bailouts for Greece, Spain, Portugal and Ireland. But it marks a turning point in European leaders' approach to bailouts, with the balance of risk shifted from taxpayers to private investors.