Cyprus Bailout Deal Raises Fear of Bank Runs in Other European Countries


CTV reports that world markets crashed on Monday following the news of Cyprus' bailout deal, heightening the risk of bank runs in other precariously balanced European countries relying on bailout schemes, including Spain, Portugal, Italy and even France.

Moreover, the political paralysis in Cyprus over this crisis is an ominous sign that should political deadlock ensue in the case of the freezing of another financial system in Europe, it would be the equivalent of signing an own economic suicide pact.

Cyprus may recover fairly soon, however, as it is likely that Russian banks are going to pour sufficient liquidity in the country's banking system to protect investments already made. At the end of last year, loans to Cypriot companies of Russian origin stood at approximately $40 billion.