Cyprus has struck a deal with the Eurogroup, averting a potential collapse of its banking system. The agreement was reached after intense negotiations and aims to restructure the country’s financial sector while protecting smaller depositors.

Key Points of the Agreement

• The second largest bank, Laiki, will be restructured, with its good assets being transferred to the Bank of Cyprus.
• Smaller depositors with less than 100,000 euros will be fully protected.
• Larger depositors in both Laiki and the Bank of Cyprus will face significant losses.
• Cyprus will receive a 10 billion euro bailout package from the Eurogroup and the International Monetary Fund (IMF).

Impact on the Cypriot Economy

The bailout deal is expected to have a significant impact on the Cypriot economy. The restructuring of the banking sector will likely lead to job losses and economic contraction in the short term. However, the agreement is also seen as a necessary step to stabilize the country’s finances and prevent a disorderly default.

Reactions to the Deal

Reactions to the deal have been mixed. Some have praised the agreement for averting a complete collapse of the Cypriot banking system. Others have criticized the deal for imposing harsh conditions on the country and its citizens.

The Eurogroup president, Jeroen Dijsselbloem, stated that the agreement represents a fair and sustainable solution for Cyprus. He emphasized the importance of implementing the agreed measures to restore confidence in the Cypriot economy.