Cyprus has been decimated by the banking crisis but has at least avoided a eurozone exit. Morgan Stanley differs, opining "Cyprus is effectively no longer a full member of the eurozone." It has certainly been relegated to second-class status.
The EU bailout deal ensures Cyprus remains a member of the eurozone, avoiding a disorderly default and return to the Cypriot pound. However, its banking sector has been decimated and its reputation as a safe refuge for foreign deposits destroyed. Capital flight will bolster and benefit banks in northern Europe, notably Luxembourg and Germany. The rift between northern EU members and the Mediterranean nations grows.
Cypriots face an uncertain future with inevitable job losses and business closures, while waiting to hear the terms of German dictated austerity they must now knuckle under.
As Cypriot banks remain closed and bank officials attempt to make sense of the restrictions which capital controls will place on funds when banks reopen, the flaws of a single eurozone currency are exposed.
Capital controls have ensured that the euro in Cyprus is no longer equal to the euro in other eurozone countries, and flouts EU ideals of a single currency. Business Insider quotes Morgan Stanley's Daniele Antonucci view that while capital controls are in place "Cyprus is effectively no longer a full member of the eurozone. In other words, while it formally stays within the currency union, a euro in a bank deposit in Cyprus is not the same as a euro in another member country. Only once all capital controls are lifted again will Cyprus’ full euro membership be restored."
Cyprus will sink into recession and be driven to sell of its capital assets to meet troika obligations. Reuters reported one 30-year-term Bank of Cyprus employee said "That will be the end. Our jobs, our rights, our welfare funds will be lost and Cyprus will be destroyed."
Cyprus has been used as a euro guinea pig by the EU elite who estimated even if the island nation was forced out of the eurozone the contagion may not be far reaching. However it leaves Greek Cypriots more vulnerable to Turkish claims over the islands natural assets if Greek Cyprus is left feeling like a second-class eurozone member.
Meanwhile German broadcaster DW puts another slant on the bailout, reporting one Cypriot woman who has lost a large sum of money said, with a smile: "Sure, it's a problem for everyone, but this is how we help our country."