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Cyprus Partly Eases Capital Controls

  • Reuters

Cypriot Finance Minister Harris Georgiades speaks to Reuters in an interview in Nicosia, Cyprus, April 22, 2013.

Cypriot Finance Minister Harris Georgiades speaks to Reuters in an interview in Nicosia, Cyprus, April 22, 2013.

Cyprus has further eased capital controls imposed last month to prevent a run on deposits, raising the threshold for transactions that do not require prior approval by the central bank, the finance ministry said on Thursday.

With the latest decree, Cyprus has permitted transactions up to 500,000 euros [$650,300] domestically without prior vetting, the ministry said in a statement.

Banks on the island were shut down for nearly two weeks in March after Cyprus agreed a 10-billion-euro [$13 billion] international bailout that forced major depositors at its two biggest lenders to pay part of the cost of the rescue.

The banks reopened under tight restrictions on March 28 - a first in the history of the eurozone - to prevent a run on deposits by panicked savers.

Firms, which cannot make transfers exceeding 20,000 euros overseas unless they are vetted by the central bank, had complained the restrictions were stifling. Russia had warned it only would restructure its loan to Cyprus if its interests were protected.

Finance Minister Harris Georgiades told Reuters he was confident the controls, which he called "necessary but temporary measures," would gradually be lifted within the next six months.

Other provisions of the new decree raised the amount individuals can transfer domestically to 10,000 euros a month from 3,000 euros, and to 5,000 euros from 2,000 euros abroad.

Travelers now may take 3,000 euros abroad, an increase from 2,000 euros. Other restrictions, such as a 300-euro cash withdrawal limit and a ban on cashing checks, remained in place.
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