A man walks near the Kio Towers, headquarters of Bankia in Plaza de Castilla on June 9, 2012 in Madrid, Spain.
A man walks near the Kio Towers, headquarters of Bankia in Plaza de Castilla on June 9, 2012 in Madrid, Spain. - 
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Jeremy Hobson: European leaders are gathering this Thursday to come up with a plan to save the Euro. I know, we've heard that before. But this time, things are getting pretty ugly.

Spanish borrowing costs jumped this morning following the country's formal request for a bank bailout. And The tiny Mediterranean island nation of Cyprus says it needs more than $10 billion from it's eurozone partners to avoid default.

For more let's bring in Marketplace's Stephen Beard in London. Good morning.

Stephen Beard: Good morning Jeremy

Hobson: So it seems like it would be hard to say that Cyprus is "too big to fail." It's not exactly Spain or Italy.

Beard: No indeed. As you say it is a small island in the east Mediterranean. Population about a million, with an economy smaller than that of Vermont. But Cyprus is important. It is a member of the eurozone and it has geopolitical importance, too.

Here's Stephen Lewis, chief economist of Monument Securities.

Stephen Lewis: Well, Cyprus occupies a strategic position in the Mediterranean. Not very far from Syria. British have used it as a base for more than a century. In military terms, it has enormous value.

That probably explains why the Russians have already lent Cyprus some $3 billion, and the Chinese are reported to be interested in lending them money too. And that may explain why the eurozone will probably be very keen to bailout Cyprus pretty quick.

Hobson: And this comes right on the heals of the formal request from Spain for a bailout yesterday. It does seem like the pace of bailouts in the eurozone is quickening.

Beard: Yes, very much so. The crisis is certainly spreading. And this bailout application is hugely embarrassing coming as it does on the eve of this latest make-or-break summit to resolve the debt crisis. It's also embarrassing because Cyprus as it happens takes over the revolving presidency of the EU next week.

As a leading Cypriot polotician said, this is a "tragic coincidence."

Hobson: Marketplace's Stephen Beard in London. Thanks a lot.

Beard: Okay Jeremy.