After Cyprus Bank Bailout, Depositors Race to Withdraw Their Cash. Is the Rest of Europe, the US Next?

A small bailout in a small state has roiled the global financial markets and triggered a political backlash as far away as Russia.  Euro and shares slide over fears that Cyprus could trigger bank runs in other countries

The €10-billion Cyprus bailout  breaks taboo of hitting bank depositors with losses, After all-night Friday talks, euro finance ministers agreed a €10-billion bailout for the stricken Mediterranean island and said since so much of its debt was rooted in its banks, that sector would have to bear a large part of the burden.

The hit imposed on Cypriot bank depositors by the euro zone has shocked and alarmed politicians and bankers who fear the currency bloc has set a precedent that will unnerve investors and citizens alike. 

“This is an unprecedented decision for a eurozone country. It is also one whose potential consequences reach much further than an island in the eastern Mediterranean. It threatens to cause the transmission system between the economic and financial sectors on one side and the political and social on the other to seize up. Without this, the euro cannot be propelled forward. It cannot function.”

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