Analysts: Cyprus bailout will cripple euro zone
"The system's profile as an offshore financial center is unlikely to survive this crisis," Moody's senior credit officer Sarah Carlson said. "The potentially irreparable damage to the country's current drivers of economic growth leaves its ability to sustain its current debt highly in doubt."
The crisis had negative implications for the credit ratings of the region's countries. Moody's Investors' Service says Cyprus will still be at risk of default for a "prolonged period" and possibly a euro zone exit. "Even if negotiations are successful and Cyprus remains within the euro area," the service said in a Monday statement, "policy makers' recent decisions raise the risk of deposit outflows, capital flight, increased bank and sovereign-funding costs and broader financial market dislocation."