Cyprus joined the E.U. in 2004 and immediately wanted to get into the euro area for the express purpose of completing, as quickly as possible, the union with the core of Europe. It was done because the public thought that would be beneficial for political reasons, not economic reasons.

The degree of monetary policy ease should be associated with the level of real interest rates, not nominal interest rates.

Cyprus had developed its financial center over three decades ago by having double taxation treaties with a number of countries: the Soviet Union, for example. That means if profits are booked and earned and taxed in Cyprus, they are not taxed again in the other country.

Sometimes you have Harvard undergraduates who stun you with the depth of their knowledge. That is why it is great to be at a university like this.