Cypriot Bailout Costs Rise as EUR Uncertainty Continues (Matthew Vassallo)

Reports surfaced during Thursdays trading that indicated the cost of a Cypriot bailout had risen to 23 billion. This now means that Cyprus will have to raise 13 billion EUR, rather than the original 7.5 billion that had been widely reported.

There is now a growing fear that Cyprus will not be able to raise these funds, which would cast serious doubts over its long-term future in the Eurozone. Whilst Cyprus is often seen as a peripheral nation, we have seen previously with Greece and Ireland that even the so called smaller nations have the potential to cause huge problems for the region in terms of a knock on effect, if their debt situation is not managed in the right manner. I shudder to think of the consequences should Spain, France or Italy get to a point where they can no longer keep up with spiralling debts and are forced to consider a EUR exit.

European Central Bank president Mario Draghi has repeatedly reaffirmed his desire to ensure no nation is forced to leave the EUR but this desire has little to do with personal sentiment and more to do with an underlying fear of what may happen to the region should one nation leave and the domino effect it could create. It may well set an extremely dangerous president that could be almost impossible to reverse.

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