Cyprus already holds the cards. They should say all foreign debts derivatives and swaps are being defaulted upon period. Pull an Iceland, take the pain, jail the bankers take the huge economic hit but get it over with. I imagine you would see more EU banks implode and likely maybe even some US banks caught up in the mess when all the derivatives and swaps start being unwound against all these worthless assets and securities that have been posted as collateral.

The derivatives exposure is the issue, once the wave of defaults starts it triggers all sorts of other exposures and the massive leverage quickly consumes all foolish enough to have been involved. Yet another reason all derivatives need placed back on balance sheets and put on a open exchange where they are marked to market nightly. If you can't cover the margins due to change in value then you get liquidated. Give a short interim time to set this up maybe a 3 month period. If the counter parties can't cover their risks then they are torn up and voided. If I make a wild claim I can jump over the empire state building there is no way I can perform such a feat then it is not a valid claim to begin with.

The same should be said about these derivatives. If there is no way to cover the exposure of the written up derivatives then it was never a valid instrument to begin with. By doing this you start getting the leverage and the huge systemic risk in the system back under control. Then they should level indictments against all EU members and everyone who had a hand in approving all this worthless paper as sound collateral in the first place which was approved under stress tests of the Cyprus banks just a short while ago. 

Pretty much spelled out here.