Wells Fargo'​s latest "​Overview, strategy, and outlook" discusses Cyrpus and its impact, saying, "Even though Cyprus is small relative to the Eurozone -- its GDP is roughly 0.​2% of the eurozone GDP -- even small countries can have destabilizing effects elsewhere, as we witnessed with Greece. With Cyprus' banks being closed for approximately two weeks and a political stalemate in Italy, one would expect LIBOR (​London Interbank Offered Rate) and sovereign credit default spreads (​CDS) to widen. However, market participants seemed to shrug this episode off. As the graphs below indicate, LIBOR curves continued to flatten and sovereign CDS only widened by about 50 basis points (​bps; 100 bps equals 1.​00%). One possible reason for this muted reaction can be attributed to the global central banks' willingness and ability to provide easy monetary policies to support global initiatives. We have maintained for some time that the effects of the ECB'​s Long-​Term Refinancing Operation and its ability to execute Outright Monetary Transactions have not only kept money market rates in check but have kept contagion risks somewhat muted. It seems like the "​do whatever it takes" mantra in the form of unlimited sovereign debt purchases by the ECB has given investors across the curve confidence that central banks will likely continue to lend support, which should in turn keep bond yields low."

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