MOODY’S: Even With The New Deal, Cyprus Could Still Default And Leave The Euro

Cyprus finally reached a deal with the EU on how to bail out its troubled banking system tonight.


Nonetheless, the events of the past week have likely shattered confidence in Cypriot banks.

In a new piece, Moody’s analyst Sarah Carlson argues that the financial crisis in Cyprus “will have profound long-term negative consequences for the sovereign,” and that “even in the best-case scenario, where the Cypriot parliament passes and implements measures that the euro area governments of the European Union, European Central Bank and International Monetary Fund (collectively known as the Troika) find acceptable, the sovereign will remain at risk of default and exit from the euro area for a prolonged period.”

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