Posted by: youngragingbull | March 28, 2013

Cyprus banks reopen today, cash restrictions still in effect

Banks in Cyprus reopened amid tight security Thursday for the first time in nearly two weeks, following an international bailout that sought to prevent the country from financial collapse.

There were long lines of anxious people waiting outside branches across the island nation, but according to various media outlets there were no incidents with security forces that were beefed up for the reopen and most people felt relieved they could once again access their bank accounts.

While the banks resumed business as usual, authorities have imposed a daily limit on how much people can withdraw to stop a run on the country’s banks.

The capital controls include limiting daily cash withdrawals to €300 per person and limiting payments abroad to €5,000. No checks can be cashed, although they can be deposited.

Anyone leaving the country, whether Cypriot or a visitor, can only take up to €1,000 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.

The limits on transactions have been imposed initially for seven days and are being reviewed daily. According to Central Bank assessments, the restrictions are to be fully lifted in a month, Foreign Minister Loannis Kasoulides said in an interview.

Banks have been closed since March 16 as Cyprus and international lenders worked out a €10 billion bailout package.

After several failed attempts, a deal was finally struck early Monday when other euro countries and the International Monetary Fund agreed to Cyprus’ plan to fix the nation’s failing banking sector. Part of the deal will see the country’s second-largest bank, Laiki, split up, with its healthy assets being absorbed into the Bank of Cyprus.

However, savers with more €100,000 in either Bank of Cyprus and/or Laiki will face big losses. At Laiki, those could reach as much as 80 percent of amounts above the 100,000 insured limit; those at Bank of Cyprus are expected to be much lower.

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Responses

  1. This whole Cyprus situation is going to cause the euro to lose value rapidly and sooner or later, a recovery through a bounce in Europe exports. At that time, politicians will be wrongly crediting the recovery to their austerity policies which have frankly been doing all harm and no good.


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