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 Cyprus
is the third largest island in the Mediterranean Sea. Many people
know Cyprus as a popular tourist destination. The
country is famous for its beautiful beaches, historical sites, and rich
culture. However, in recent weeks, Cyprus has been in the news for
all the wrong reasons.
Like other European countries, such as Greece, Spain, and Italy, Cyprus
has a big debt problem. The country’s
banks are broke, and the government
is bankrupt. About 10 months ago, Cyprus asked for a bailout, or loan, from the European Union,
the European Central Bank, and the International Monetary Fund.
In mid-March, the three groups finally agreed to bail out the troubled
country. They said they would give Cyprus a $13 billion loan if the
country can come up with some of the money. But since the government
is broke, where could it get the funds? From the public. Under this
controversial deal, people
who have more than 100,000 Euros in their savings accounts will lose
up to 40 percent of their money.
Not surprisingly, this proposal was hugely unpopular with the public.
But Cyprus had no choice because they need the $13 billion loan to
fund the banks and the government. So a solution was reached on March 25.
 French
Foreign Minister Laurent Fabius called the results unfortunate but a
necessary step to recovering
the country’s banking system.
So what’s been happening in recent weeks? The government set limits
on how much money people can withdraw from automatic teller machines.
This is in an effort to stop people from
pulling out large sums of money from their
accounts, because this could cause banks to collapse completely.
 Currently,
customers can only withdraw
about $383 in cash daily. The government also placed restrictions on transfering money to accounts
abroad.
Despite the bailout, which should be finalized by mid-April, the future
looks uncertain for Cyprus. Will
it become the first country to be kicked out of the Eurozone? We’ll
have to wait and see. |
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