Although a deal has been reached, many believe the long term damage has already been done, and that the nation will have to impose strict restrictions on money transfers in the coming weeks.
Wealthy depositors from countries like Russia have long used Cypriot banks to store cash because of the country's lenient banking laws and low corporate taxes.
A eurozone breakdown has been avoided but the euro will be under pressure in the months to come as investors pull their money from Cyprus and surrounding countries. However, the terms of the new deal were not met with open arms; TheWall Street Journal reported that President Nicos Anastasiades threatened to resign on Sunday evening amid calls for a comprehensive restructuring of Cypriot banks.
Cyprus has become an offshore tax haven over the past ten years, which has been a source of tension between Cypriot lawmakers and eurozone officials. Restructuring the country's banking sector is likely to have dire consequences, as nearly half of its economic activity comes from financial services.
The new bailout agreement may be too little too late, as many believe the long term damage has already been done and that the nation will have to impose strict restrictions on money transfers in the coming weeks to keep account holders from quickly withdrawing all of their money when the banks reopen.
BY Laura Brodbeck
Wealthy depositors from countries like Russia have long used Cypriot banks to store cash because of the country's lenient banking laws and low corporate taxes.
A eurozone breakdown has been avoided but the euro will be under pressure in the months to come as investors pull their money from Cyprus and surrounding countries. However, the terms of the new deal were not met with open arms; TheWall Street Journal reported that President Nicos Anastasiades threatened to resign on Sunday evening amid calls for a comprehensive restructuring of Cypriot banks.
Cyprus has become an offshore tax haven over the past ten years, which has been a source of tension between Cypriot lawmakers and eurozone officials. Restructuring the country's banking sector is likely to have dire consequences, as nearly half of its economic activity comes from financial services.
The new bailout agreement may be too little too late, as many believe the long term damage has already been done and that the nation will have to impose strict restrictions on money transfers in the coming weeks to keep account holders from quickly withdrawing all of their money when the banks reopen.
BY Laura Brodbeck
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