A very helpful comparison from Kevin Drum:
Just to give you an idea of what all the numbers mean, the EU/IMF plan requires Cyprus to come up with about $7.5 billion as its share of the bailout. That's roughly a third of their GDP. To put that into local terms, it would be as if the United States were being asked to pony up $5 trillion. This is about equal to all government spending—federal, state, and local—for an entire year.
No country in the world has ready access to that kind of dough, which is why the original plan relied on taxing bank deposits. There just weren't a lot of other options.
Here's one more number: $12.3 trillion. That's the GDP -- in dollars -- of the entire euro zone in 2012. Compared to that, the $7.5 billion Cyprus is struggling to find is about one six-hundredths of 1 percent. The euro zone could wipe out the debt and never notice. Conversely, Cyprus could fail and set off a much, much more costly run on other, larger countries in the euro zone.
The problem with bailing out the Cypriot financial system isn't economic. It's political. The citizens of the richer euro-zone countries, understandably, refuse to foot the entire bill. And so everyone is risking a much costlier disaster. And this isn't anywhere near the scariest political crisis brewing in the currency union.