Undoubtedly, the Cyprus banking system was fine before they were hit by the financial crisis. There were problems here and there, but it was not to the point that they had to resort to borrowing huge amounts of money that they are not able to pay. However, their decline is also kind of expected. With their involvement in the Greek debt crisis, those who could help them are reluctant in doing so. Being that the financial crisis is too troublesome and hard to resolve, the Cypriot government resorted to a solution that its people do not agree on.
Bailout plans were made for the island, provided that the Cyprus Popular Bank, its second largest bank, closes down. All the uninsured deposits in the bank are either taxed or collected, but those who have insured deposits of less than a hundred thousand euros are not affected. Surprisingly, many Russians have accounts in the bank due to the fact that it is a tax haven, a state wherein taxes are levied lowly or none at all.
The United States is certainly not to be blamed for the world financial crisis. There are identifying factors on how it started, but it cannot be blamed on one country only. After all, they do not control the world economy. If there is something that caused the Cyprus economic failure, it would be the tax haven. It does not bear all the responsibility though, as there are other factors on why it resulted to failure. There is also the fact that the country helped Greece by loaning them huge amounts of money that are yet to be returned.
At this point, there is a need for emergency loans to be given to Cyprus. As they experience financial troubles though, there are only a few who are willing to lend them the money; if they agree, then the interest rate may be too high.
The Cypriot government is currently ensuring that things would turn out for the better. Aside from the loans they have taken, they have also sold their extra gold, and although the amount was not able to pay everything and help all the Cypriots, it managed to alleviate the painful reality of economic problems in the country. The high unemployment rate even adds to the problem, as it continues to plummet the country with debts that are harder to repay. The wrong decisions made by their government had ensured the crisis, and it seems like the country will have to face more difficulties before finally being able to get by the economic crisis.