Cyprus is a country of 800.000 people. How are they going to manage having a professional bureaucracy that can supervise a couple of world class banks? They can’t. Iceland was far smaller and couldn’t either.
Cyprus is lost in hubris. Its previous President and conspiracy-theorist in chief Dimitris Christofias was a true and unabrogated communist. The leadership in Cyprus has received endless warnings about its inflated banking sector and its unhealthy exposure to Greece. But instead of taking things seriously they just didn’t get it and chose to see monsters and vermin. At this very moment they think they can bluf their way into a full bailout paid for by German taxpayers. What arrogance.
Cyprus got a free ride into the EU and Eurozone thanks to the Greeks who wanted a victory against the Turks. The EU with its usual mindlessness complied and now we’re in this grief.
Kicking Cyprus out of the Euro is a good solution if banks exposed to its exit are shored up enough. It’ll be a good warning that the EU and Eurozone is not a free lunch and that German taxpayers don’t write blank checks.