system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5:Why is Cyprus on the verge of bankruptcy?

How can an entire country go bankrupt? I guess this also relates to Greece. Is there a connection with these countries and their adoption of the Euro?
gpt
Cyprus has a large banking industry that functions largely as a tax haven for foreigners (read: "legitimate businessmen" in Russia). Cypriot banks had enormous deposits, and invested those deposits. The financial crash caused many of those investments to fail, and the banks lost so much money that they are no longer able to pay back depositors. The nation of Cyprus doesn't want to lose all of the foreign banking business, but it simply doesn't have the money to fully guarantee everyone's deposits. And, since it doesn't control its own currency or monetary policy, it can't simply inflate away the brunt of the losses.

Their plan is to take out large bailout loans from the rest of the Eurozone, guarantee most of those deposits, and "tax" the remainder. This proved massively unpopular with ordinary Cypriots, who would lose part of their savings so that the government could bail out foreign ~~mobsters~~ investors. It seems that the new plan is to fully guarantee "smaller" deposits and tax larger deposits more heavily, which will probably spell an end to the Cypriot tax evasion industry.

If Cyprus had its own currency, and owed its debts in that currency, then it could simply "print money" using conventional monetary policy and avoid the worst of these problems, at the cost of inflation. But more powerful Eurozone nations don't want inflation, so Cyprus is out of luck on that front.