Eurozone overestimating ability to contain crisis, says ratings agency

The eurozone’s handling of Cyprus’s bailout puts extra pressure on its downgrade- threatened sovereign ratings and shows policymakers overestimate their ability to contain the crisis, credit agency Moody’s said.

Cyprus clinched a €10bn bailout from international lenders this week, but its terms have broken with past taboos by seizing up to 40% of the cash held in the island’s banks by wealthy individuals and firms.

Market analysts fear that could set a precedent for future rescue efforts and make the region more prone to bank runs if depositors in other debt-strained countries think their money is no longer safe.