Bailout of Cyprus Research Paper Example | Topics and Well Written Essays - 500 words

Bailout of Cyprus - explore Paper ExampleThe two banks lost more than 2.3 billion Euros on Greek sovereign bond, which they asked the utter to fill in their regulatory capital (Telegraph, 2012). In addition, Cyprus economy had been depict as a gambling casino economy. In other words, the inelegant has a banking sector much larger than the countrys megascopic domestic product. This has been said to be negligence in following the banking rules, making everyone else vulnerable to such sparing crisis (Erlanger & Kanter, 2013). Another major problem according to Erlanger & Kanter that led to Cyprus economic crisis is the threat by Euro zone countries to confiscated crucial part of the savings of Cypriot banks depositors. The result was that large depositors and ordinary savers in such banks were uncertain closely their savings. The private sector was therefore more reluctant to steer more funding to financial institutions in trouble as in the case of Cyprus, which increased the n eed for the country to look for a bailout from the European Central Bank. Cyprus problems also emanated from the countrys wage bill which as analysts explain is the highest in the Eurozone, implying the country similar to Greece has a lavish life where their GDP is much less than their net expenditure.Cyprus bailout has attracted differing views from policy makers and economists. The bailout has been described as a major victory from Eurozone hardliners such as Germany. The hardliners baffle over the time do it clear that countries only qualify to be rescued in case they acknowledge and do self-abasement of their past mismanagement as would be determined by their rescuers (Erlanger & Kanter, 2013). The argument is that such bailout will have a higher public support for the euro and demand for greater prudence from other countries. However, the critics of the bailout explain the integral arrangements were haphazardly carried out to an extent that it underscored the chaotic nature of European decision making more than