The eurozone is tottering on the brink of a fresh crisis as Cyprus banks reopen today with harsh controls to prevent panic cash withdrawals.
Fears of contagion to debt-stricken Italy and Spain have been reignited by a spike in their borrowing costs, as investors shun their government bonds in favour of rock solid German bunds.
Stock markets are higher this afternoon, but traders are keeping close watch on Cyprus where banks are finally opening their doors almost two weeks after being shut down by the government.
Cypriots face draconian rules on what they can do with their money – cash withdrawals are limited to no more than €300 per day, the cashing of cheques is banned, and businesses are barred from transferring money abroad unless they can show it is for imports.
But the focus is now back on debt woes of Italy – which still has no government after an inconclusive election – as well as Spain, amid fears they could spiral out of control and threaten the euro’s survival.