Instead of putting the brakes on the collapse of European economies, they poured on the gas, and ensured that everybody hits bottom in quick succession.
That was not the cause. Bad monetary policy is, well, bad and the only good monetary policy may be not to have one, but that didn't cause the banks to fail. Failing oversight is what caused the banks to fail. Or to grow to be too large to fail before failing. Effective oversight (whether through market forces or effective government oversight) would have prevented the problem. Ineffective oversight would have caused it regardless of what the EU did. Ineffective oversight is the deciding factor, and that is a purely Cypriot responsibility.
Bad monetary policy also didn't cause the economic mess in general. A solvability crisis doesn't help, but Europe's labour and services markets are still very rigid and rigged. That's socialism for you.