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MALTA: Like Cyprus, Malta is a small island country with a big banking system
-- eight times annual GDP. Its banks have not suffered the huge losses on government bonds that brought down Cyprus' banks. But last year the IMF warned that the size of Malta's banking sector and its interconnectedness to the rest of the eurozone raised the potential for trouble to spread from elsewhere. It told Malta, whose economy has so far avoided a recession, to strengthen deposit insurance guarantees and push banks to strengthen their finances. The head of the central bank has said that comparisons to Cyprus are misleading. The country is 0.07 percent of the eurozone's economy, with only about 6.7 billion euros of GDP. LUXEMBOURG: The small, wealthy country's banking system is more than 20 times the size of the economy. Economist Gros says it's completely different from Cyprus, since the banks are subsidiaries of foreign banks, whose parent companies could take any losses. So far the banking sector seems calm. The terms of the Cyprus bailout could give Luxembourg cause for concern, however. Germany insisted that as part of the rescue, Cyprus should shrink its banking system to the EU average
-- about 3 1/2 times GDP -- and abandon its business model of seeking prosperity as a financial center for foreign savers and investors. Luxembourg, which accounts for 0.4 percent of the eurozone, has followed a similar business model to Cyprus. The country's government has taken exception to the idea, saying it was concerned about "general assessments of the size of the financial sector and the alleged risks this poses." The financial sector is a key pillar of the economy, accounting for 27 percent of GDP. SPAIN: The country's banks have been struggling under toxic property loans and assets since Spain's property bubble collapsed in 2008. The level of bad debt in the country's banks hit almost 11 percent in January
-- some 170.7 billion euros ($220.9 billion) in the first month of the year, up from 167.5 billion euros the previous month. The toxic loans have been transferred to the country's bad bank, which was set up as a condition for Spain receiving 40 billion euros in European Union assistance for its financial sector last year. Spain is the No. 4 country in the eurozone, with about 12 percent of the collective economy. The Cyprus deal has led to speculation that depositors there might head for the exits if the country moves toward a bailout. But that hasn't happened so far. The financial system appears more stable since the European Central Bank offered to help with a country's borrowing costs by buying up unlimited amounts of short-term government debt if necessary.
[Associated
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