You're misunderstanding "in it's accounts". Cyprus banks have debts to account holders of €68 billion (people have deposited €68 billion into bank accounts in

You're misunderstanding "in it's accounts". Cyprus banks have debts to account holders of €68 billion (people have deposited €68 billion into bank accounts in Cyprus). They didn't do that because they felt their money would be happier on the sunny island, they did it because Cypriot banks were offering higher interest rates than banks in other countries. Also they didn't ask many questions about where the money came from. In order to offer interest on deposits, banks have to lend money out. In order to offer high interest rates, banks have to lend money to more risky sources, which is what Cypriot banks did (they bought a lot of Greek bonds, whoops!) In this way, Cypriot banks were more exposed to the crisis than other banks. Turns out, Greece wasn't a great investment. This is why the banks went bankrupt. They can't pay the interest on the deposits they've taken, and they could not pay back the money that depositors have 'loaned' them. This is why they need a bailout. Other countries (Germany) aren't comfortable guaranteeing the crazy promises (high interest rates) Cypriot banks promised their (mostly Russian) depositors. They claim that depositors knew the risks: high interest, offshore, no-questions-asked, island bank accounts of more than €100k (e.g. not government-guaranteed) are risky. So they're forcing these depositors to take a loss during the bankruptcy restructuring.