Cyprus bail-out does not stop long-term problems for euro

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FX markets pose challenges as outcome of aggressive government action hits markets

Although the eurozone appears to have averted an immediate crisis, long-term damage has been done by the Cyprus bail-out fiasco. Despite EU officials' claims they are not setting precedents, they are, says John Hardy, head of foreign exchange (FX) strategy at Saxo Bank.

"We should all perk up our ears when we hear Pimco saying it will reduce its exposure to euro assets," he wrote in his daily FX column last week. Hardy believes the EU risks triggering "tremendous institutional flows" as well as