Cyprus banks reopen to tough new rules

Cypriots anxious to get into a bank in the capital of Cyprus today.
Cypriots anxious to get into a bank in the capital of Cyprus today.

NICOSIA — Banks in Cyprus have reopened after a two-week closure amid EU-IMF bailout talks, with orderly queues for cash and strict limits on daily withdrawals.

Branches were replenished with cash overnight and police were deployed amid fears of a run on the banks.

Some queues did form but the mood was calm, and the country’s president thanked Cypriots for their “maturity”.

The restrictions on the free movement of capital represent a profound breach of an EU principle, correspondents say.

However, the European Commission today justified the move, saying the “stability of financial markets and the banking system in Cyprus constitutes a matter of overriding public interest”.

Information from the Central Bank of Cyprus released today showed that foreign depositors had already withdrawn 18 per cent of their cash from the nation’s banks during February, before the current crisis hit home.

Cyprus is the first eurozone member country to bring in capital controls.

It needs to raise ‚5.8 billio to qualify for a ‚10 billion bailout from the European Commission, European Central Bank and the International Monetary Fund, the so-called troika.

As part of the bailout plan, depositors with more than ‚100,000 will see some of their savings exchanged for bank shares.

An earlier plan to tax small depositors was vetoed by the Cypriot parliament last week. (BBC)

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