Cyprus is a small Mediterranean island situated at the crossroads of Europe, Africa, and the Middle East. Since its 1974 schism, Cyprus has grown real GDP more than fivefold-in large part due to the development as an "international business" center. The country developed a large network of double-taxation-treaties (including a number of the most solid agreements with Russia and other ex-Soviet Republics) that enabled it to serve as a tax-saving conduit for international capital flows. In 2002 it acceded to the European Union and in 2008 to the Eurozone.
Nevertheless in 2012, confronting an illiquid banking sector and fiscal deficits, the island turned into the fourth EU state to officially request aid from the EC-ECB-IMF Troika. The concluding assistance bundle needed a "bail-in" from uninsured depositors in order to return the country's biggest banks to solvency. Had Cyprus's development model led to both the island's fiscal catastrophe together with the construction of its own ultimate aid bundle?
PUBLICATION DATE: October 17, 2013 PRODUCT #: 714010-HCB-ENG
This is just an excerpt. This case is about GLOBAL BUSINESS
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