One of the reasons the crisis in Cyprus has had limited market effects is that something like that would be unlikely to be repeated in the U.S.
That’s not to say it could never happen. The truth is, there have been bank runs pretty much as long as there have been banks, so a liquidity crisis certainly could hit American financial institutions and cause substantial damage. But as a matter of scale, the problems in Cyprus are far worse than anything likely to wash up on U.S. shores. [Read more...]