Cyprus's debt ratings have been downgraded to "default" after it announced it would delay paying back 1bn euros ($1.3bn; £860m) of bonds.
The Cypriot president has asked eurozone officials to overhaul the country's €10bn bailout plan due to its unmanageable impact on the Cypriot economy, according to reports.
Marcus Brookes, head of multi-manager at Cazenove, is backing Europe over the US despite the region's problems.
Recent events in Europe around the liability of depositors in Cyprus bailing out the island's troubled banks have left investors nervous about the security of their own investments in Europe's banks.
It may have been hitting the headlines for all the wrong reasons but Cyprus is still proving a popular holiday destination for Brits searching for some last-minute spring sunshine.
The EU bail out conditions could have a detrimental effect on Cyprus' tax centre status, according to accountants, Baker Tilly.
Pension payments into Cypriot bank accounts for British expats have been suspended by the UK's Department for Work and Pensions.