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Crisis In Cyprus Was It Different This Time? Case Solution
| Solution Id | Length | Case Author | Case Publisher |
|---|---|---|---|
| 1577 | 470 Words (3 Pages) | Nandita Yadav, Pratap Chandra Biswal | Ivey Publishing : W13369 |
A Word File
Cyprus experienced a terrible economic crisis that started in 2012 and to deal with the crisis; it requested a bailout from European Union so that the banking system does not collapse. The main reason behind the crisis is considered to be the rising debt of the country, attachment to Greece and decreased revenue resulting in a budget deficit. There was also a lack of foreign investment in the country leading to financial constraints (Cyprus International Institute of Management, 2013).
Following questions are answered in this case study solution
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What were the causes of the economic crisis in Cyprus (banking crisis and sovereign debt crisis)?
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Who were the stakeholders in the Cypriot crisis? Choose one of the stakeholders and discuss the situation from their perspective.
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Evaluate the options available to Cyprus.
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Identify policy issues that emerged as a consequence of the crisis.
Case Analysis for Crisis In Cyprus Was It Different This Time?
2. Who were the stakeholders in the Cypriot crisis? Choose one of the stakeholders and discuss the situation from their perspective.
The money owners got highly affected by the crisis as the banks were not able to accommodate the account holders and money withdrawers because of less economic activity in the country. These money holders were at high risk of bankruptcy and were not even sure that the banks would be able to compensate for their loss. Other investors in the Eurozone were also worried that the impacts might get extended to other European countries (Katasonov, 2013).
3. Evaluate the options available to Cyprus.
Fiscal deficit is the biggest issue at the time of the crisis, so it is vital that Cyprus tries to cover that cliff perhaps by introducing a new policy. Investment from abroad and foreign exchange appreciation can help in that situation. But as the banks are not in a good condition, the authorities need to make sure that the investors are given the insurance that their money would be safe and not matter what happens, they would be compensated (Orphanides, 2014).
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