The situation could go one of four ways, according to Mats Persson at think tank Open Europe- the levy is forced through as the best of a bad bunch, the eurozone loosens its terms, Cyprus looks elsewhere, possibly Russia, to raise extra cash, or total collapse of the Cypriot finance system. The final scenario could be catastrophic for the island, which could find itself exiting the euro, printing its own currency and risking hyperinflation.
But what happens if they leave, print their own currency and then in a year or so everything is ticketty boo?
That would really put the kybosh on the euro project, wouldn\’t it? And we should note that hyperinflation isn\’t a necessary outcome of their doing so.