The decline in European stocks and the euro today, post-Cyprus, is an obvious outward sign of nervousness.
In the coming days there will be more news about whether "contagion" channels have been re-opened and whether concerns about Cypriot banks have spread to other peripheral nations.
Lorcan Roche Kelly, an analyst at Trend Macrolytics, has a note out arguing that a wider panic is unlikely, but that more information will be available in the days ahead.
He writes:
• The precedent aside, there is little risk of a bank run in other peripheral euro area nations. Cyprus is viewed as being sufficiently unique by other peripheral depositors — the Russian mobster money-laundry service story is well known in Europe — to allow this to pass without too much immediate contagion risk.
• Even if there is such a risk, Jörg Asmussen — a German representative on the ECB's Governing Council, who had a leading role in negotiations of the deal — said that the European Central Bank stands ready to provide support to any euro area banks through normal monetary operations and national central bank emergency liquidity assisstance (ELA).
• We can easily monitor if either of these promises by Asmussen are called upon by European banks. There is a normal liquidity operation due to be allocated on Tuesday, with all operations so far this year in a tight range from €124 billion to €132 (~ $160 billion) . The overnight liquidity Marginal Lending Facility operations will also be an early indicator of stress.
• If ELA is called on in any major way, we will see it in the weekly ECB financial statement. Unfortunately, any moves this week will not be reflected until the following Tuesday.