Cyprus Crisis 2013
Cyprus 2013 combined a Greek-PSI hole in bank assets with a huge banking system versus GDP and ended in bail-in, capital controls, and a depositor haircut above insurance — a euro-area first.
Definition
Cypriot banks were oversized and long Greek sovereign. After PSI they were insolvent. The first program tried to tax insured deposits; the revised deal closed Laiki, bailed in large uninsured deposits at BoC, and imposed controls.
Why it matters
It ended the fantasy that euro deposits were always safe above the political limit. Bail-in became real, not a term sheet.
Case
March 2013 closed banks, ATM limits, and a template the rest of the EA swore was unique. It still repriced uninsured-deposit risk.
How to read it
Bank assets / GDP, foreign-deposit share, and sovereign-bank loop. If all three are extreme, Cyprus math is in play.