Belfast Telegraph

Thursday 23 October 2014

Cyprus curbs 'may last one month'

Restrictions on financial transactions in Cyprus could be fully lifted in a month, Foreign Minister Ioannis Kasoulids says. This was based on assessments by the country's central bank.

Cyprus imposed capital controls to limit withdrawals and transfers abroad when its banks opened today for the first time since March 16. They were announced last night to prevent worried savers from withdrawing all their money during an acute financial crisis. The restrictions were imposed for seven days initially and are being reviewed daily.

Across Cyprus, large but orderly lines formed ahead of the opening of banks for six hours from noon, and guards from private security firms reinforced police outside some ATMs and banks in the capital, Nicosia. No particular crowd issues were reported.

President Nicos Anastasiades expressed his "warm gratitude and deep appreciation towards the Cypriot people for the maturity and spirit of responsibility they have shown at a critical time for the stability of the Cypriot economy," a statement from his office said.

Banks have been shut in Cyprus since March 16 to prevent people draining their accounts as politicians scrambled to come up with a plan to allow the country to qualify for 10 billion euros (£8.5 billion) in international bailout loans for its stricken financial sector.

A deal was finally reached in Brussels with other euro countries and the International Monetary Fund early Monday. The country's second-largest bank, Laiki, is to be split up, with its healthy assets being absorbed into the Bank of Cyprus. Savers with more 100,000 euros (£85,000) in both Bank of Cyprus and Laiki will face big losses. At Laiki, those could reach as much as 80 % of amounts above the 100,000 insured limit; those at Bank of Cyprus are expected to be much lower.

The Finance Ministry announced capital controls - to be reviewed daily and initially applying for seven days - to prevent a rush of euros out of the country's banks when they reopened.

They include limiting daily cash withdrawals to 300 euros (£255) per person and limiting payments abroad to 5,000 euros (£4,200). No cheques can be cashed, although they can be paid in. Anyone leaving the country, whether Cypriot or a visitor, can only take up to 1,000 euros (£850) with them in cash.

The country's general accounting office said pensions and other social security payments, together with salaries for government employees, will be in bank accounts next Tuesday and Wednesday.

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