Cypriot banks finance themselves through deposits, not bonds. Less than 0.3% of Laiki's and 2.5% of Cypriot banks' €70 billion in assets are funded by bonds. Further, those bonds were issued under English law. The depositors are governed by local law.

Government insurance means nothing when the government is broke (relative to the size of its banks). Nicosia does not have the €30 billion to reimburse accounts covered by the country’s deposit guarantee scheme. No bail-out means depositors being wiped out.