Submitted by: Donald Hank
Cyprus to Restrict Money Flow within Eurozone
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Cyprus is imposing unprecedented controls on Cypriot bank depositors moving their money within the common euro currency union as it looks to reopen its banks Thursday.
Cypriot Finance Minister Michael Sarris said the controls are necessary to restore confidence in the island nation’s banking system.
“We believe that some sort of capital controls that will moderate whatever outflows are bound to happen will restore confidence and they will be removed in a relatively short period of time in agreement with, that I say, the general rules of the eurozone and the European Union,” he said.
“We believe that some sort of capital controls that will moderate whatever outflows are bound to happen will restore confidence and they will be removed in a relatively short period of time in agreement with, that I say, the general rules of the eurozone and the European Union,” he said.
Cyprus said depositors can move no more than $3,831 to other countries. The restriction comes in the aftermath of the country, one of 17 eurozone nations, securing a $13 billion bailout from its international lenders. As part of the deal, Cyprus agreed to confiscate 40 percent or more from the biggest, uninsured accounts above $130,000 to help pay for the rescue.
Cyprus’ banks have been closed for nearly two weeks, with depositors facing restrictions on the amounts they could withdraw from automated teller machines, to prevent a massive run on accounts. The daily withdrawal limit could increase from $128 to $383. But the uncertainty has frustrated Cypriots, including Nicosia resident Andreas Antoniou.
”You can’t really move, people don’t have any money on them to move around, they’re scared, there’s uncertainty, don’t know if banks will open tomorrow or not,” he said.
”You can’t really move, people don’t have any money on them to move around, they’re scared, there’s uncertainty, don’t know if banks will open tomorrow or not,” he said.
Meanwhile, the head of Cyprus’s biggest bank has been fired from his post. Bank of Cyprus chief executive Yiannis Kypri was dismissed by the nation’s central bank, following the appointment of a special administrator for the lender. The bank’s chairman submitted his resignation after the administrator was appointed, but the bank board rejected his request.
The Bank of Cyprus is being forced to restructure under terms of the rescue package the Mediterranean nation reached this week with its European neighbors, the European Central Bank and International Monetary Fund. The bank will absorb some of the assets of Cyprus’s second-largest bank, Cyprus Popular, also known as Laiki, which is being shut down.
Cyprus is the fifth of the eurozone nations where billions of dollars in bailouts have been needed to ward off bankruptcy, following Greece, Portugal, Ireland and Spain.
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