The economic effects of the European Union-sanctioned bailout of the Cypriot financial system are already being felt, according to reports from the Cyprus media as well as international sources. Most concerning is the fact that many small businesses are finding that they can't access a majority of the funds in their bank accounts, meaning that they might be forced to trim their payrolls significantly to survive. As one may expect, this could have a tremendously negative impact on the island nation.
One business owner, according to independent finance blog Zero Hedge, took to a Bitcoin-affiliated internet forum to explain his situation. While he previously had more than 800,000 euros deposited, he can now only access just over 100,000 euros. The unnamed Cypriot shared some of this thoughts on the impact of this new policy, and the findings are a troubling sign of things to come.
"I'm not Russian oligarch, but just European medium-size IT business. Thousands of other companies around Cyprus have the same situation. The business is definitely ruined, all Cypriot workers to be fired. We are moving to small Caribbean country where authorities have more respect to people's assets. Also we are thinking about using Bitcoin to pay wages and for payments between our partners," he wrote.
Fox Business reported earlier this week that economists in Europe are fearing the worst, especially if credit markets seize up during the financial industry restructuring. One referred to the developments as potentially "calamitous for small businesses."
This slow-moving disaster that is the Cyprus bank bail-in runs the risk of plunging the European Union back into economic volatility, and as such, investors should tread carefully and keep an eye on their risk indicators. Taking wealth preservation steps to hedge against losses may be a wise choice during these tough times. To learn more, visit GreatWealthStrategies.com and download a "Free Game Plan Report."