And now we answer the basic question that lots of people have wondered since they’ve tarted reading about the crisis in Cyprus: Where is it?
Below is a map of Europe. Cyprus is the tiny island off the coast of Turkey circled in red on the far right of the map.
Photo: flickr / breki74
This little country, one of the euro zone’s smallest member states, has a population of roughly 876,000 and a GDP of $22.4 billion, according to 2012 IMF staff estimates.
At $22.4 billion in GDP, Cyprus has one of the smallest economies in the euro zone, and is more on par with the size of a mid-sized American city than than the typical euro area member state.
The Cypriot banking system is known as a big offshore tax haven for Russian oligarchs and mafia types looking to launder money.
The banks got wrecked on Greek sovereign debt, which they were heavily invested in when the euro crisis hit.
Because Cypriot banks are mostly funded by deposits as opposed to bank debt – many of which are Russian deposits – the EU decided to subject depositors in Cypriot banks to the brunt of the cost of the bailout.
This is a controversial decision because the EU has never violated the cardinal rule of public trust in the safety of bank deposits before.
However, they decided to do it largely because the thought of German taxpayers bailing out banks holding the deposits of Russian money launderers doesn’t play well ahead for German politicians ahead of German elections in September.
Now, there is concern that depositors in other fragile euro zone countries, like Greece and Spain, will be spooked.
That’s why everyone is so concerned about this tiny island nation off the coast of Turkey.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.