A Reuters investigation showed that with EU reports dating back to 2003, there was no warning sign to indicate the meltdown of Cyprus' banking sector and its effect on its economy. This was found despite the European Union setting up checks to monitor such issues and avert these instances.
A further inquiry found that the Cypriot banking sector is seven and half times bigger than its economy. Cyprus generates around Eur18 billion or US$23.27 billion a year as an economy as a whole but its banking system is much larger than that.
The Cyprus meltdown was a consequence of the Greek sovereign debt restructuring in 2012 as its three major banks suffered heavy losses. There have been emergency loans coming from the Euro Zone but only after a bailout agreement has been reached. One of the conditions in the agreement is to cut the banking sector to half of current size by 2018 to match the EU GDP to banking sector ratio of 3.5.
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