Are there lessons for Ireland in Cypriot crisis?

The image of the beautiful Mediterranean island of Cyprus has been thrust from that of a tranquil holiday destination to an economic disaster.

The image of the beautiful Mediterranean island of Cyprus has been thrust from that of a tranquil holiday destination to an economic disaster.

Never before has it attracted such worldwide attention.

In recent times all the focus on the Euro ills have been on Greece, Italy, Spain, Portugal and of course Ireland.

Our economy may differ from a massive one such as Italy’s but still we can pack a punch on the world markets.

But Cyprus! It’s a tiny country with a tiny GNP but its banking system dwarfs all else.

And that’s what has got it into trouble on such a scale.

Cyprus has now become a byword for banking mismanagement and its people are about to pay a heavy price.

The banks - the root of all its problems - have been shut since before St Patrick’s Day and are only expected to reopen this week.

ATMs have been restricing withdrawals to €100 per day.

But what was happening to deposits was the most alarming for the Cypriots. The original proposal put forward by our friends, the Troika, was to hit all deposits with a 20% tax. That meant that depositors who had no hand, act or part in bringing about the crisis were being asked to help fix it by losing one fifth of their money.

Following protracted and tortuous negotations, an alternative was agreed that deposits up to €100,000 wouldn’t be touched but anything over that would be hit by the 20% levy.

It’s still a blow to anyone with funds more than €100,000. And what guarantee is there that amounts lower than won’t be touched in the future. The word ‘sacrosanct’ has been used to describe this money but it’s only a word.

And how worried should we be in this country. Our banking system can hardly be held up as a role model and what guarantee can we have that if our austerity measures fail to meet ther requirements of the Troika that they won’t try to tax our bank deposits.

Michael Noonan has said sacrosanct again in relation to our money but can he be sure. We will watch the Cypriot crisis with heightened interest.