Redefining Country Risk in Europe after Cyprus?
The transformation currently taking place within the European Union not only casts doubt on the future of the bloc, but it also brings to the forefront elements that redefine the notion of country risk. The conditions Brussels has attached to its assistance to Cyprus have opened a discussion on how much control a country’s government should have over the financial sector and, ultimately, its citizens’ savings. Ever since the great depression in the 1920s, the idea that bank deposits are secure has been a fundamental banking principle. Brussels’ demand that depositors pay for the bailout of their Cypriot banks breaks the social contract in place in Europe since the 20s. [...]




