Two questions about Monday's action:
1) Why was there no market freak-out, no bank runs?
A lot has been made that the Cypriot situation is "unique" and cannot be applied to rest of the euro area. Yes—and no.
The overwhelming response from traders has been: No freak-out because everyone believes the Federal Reserve and the European Central Bank is backstopping everything. Most believe that if push comes to shove, the ECB will print as much money as it needs ... even if it means using that money to pay depositors. Even if it means putting funds back into banks to replace the lost deposits.
(Read More: Cyprus Gives the Fed More Reasons to Buy Bonds)
Yes, too much printing will cause inflation, and that will reduce the value of the currency. But, absent hyperinflaion, that will not cause a bank run.