Europe

Cyprus eases some bank restrictions after bailout

  • 29 March 2013
  • From the section Europe

The Central Bank of Cyprus has eased some of the restrictions imposed as the nation's banks reopened, following an international bailout deal.

Debit and credit cards can be used normally for domestic payments.

The central bank said it would review the curbs on a daily basis and try to "refine or relax" them when possible.

A 5,000-euro (£4,223) monthly limit per person remains in place for card purchases abroad, to stop the flight of capital from the country.

The central bank said in a statement on Friday: "Each day, we will measure and look to refine or relax these controls with the overriding goal of safeguarding and stabilising the Cypriot financial system."

The move appears to be an attempt to make life as easy as possible for the domestic economy, while preventing the outflow of funds from the island, correspondents say.

'Experiment'

Cyprus needs to raise 5.8bn euros ($7.4bn; £4.9bn) to qualify for the bailout, and has become the first eurozone member country to bring in capital controls to prevent a torrent of money leaving the island and credit institutions collapsing.

As well as a daily withdrawal limit of 300 euros, Cypriots may not cash cheques and those leaving the country will only be allowed to take 1,000 euros with them.

Depositors with more than 100,000 euros will see some of their savings exchanged for bank shares.

Foreign Minister Ioannis Kasoulides said on Thursday that such controls could gradually be lifted over the course of the month. But many economists predict the controls could be in place for much longer.

Earlier on Friday, President Nicos Anastasiade said Cyprus had "averted the risk of bankruptcy" following the 10bn-euro bailout deal with the EU and IMF.

"The situation, despite the tragedy of it all, is contained," he added.

But the president accused other members of the eurozone of making "unprecedented demands that forced Cyprus to become an experiment".

Also on Friday, Greek media published a list of Cypriot politicians who allegedly had loans written off by banks at the heart of the island's financial crisis.

The Bank of Cyprus, Laiki and Hellenic Bank apparently forgave loans of millions of euros to companies, local authorities, and politicians from some of the island's biggest parties.

The list has been handed to the ethics committee of the Cypriot parliament and an investigation is said to be under way.

Banks opened on Thursday for the first time in nearly two weeks amid severe new rules imposed as part of the bailout deal.

Queues formed of people trying to access their money, but the mood was generally calm.

By Friday, banks had returned to their normal working hours and there were no longer reports of big queues.