News / Europe

Cyprus Controls Expected to Target Foreign Transactions

Cyprus Crisis Agreement Could Lead to Credit Crunch, High Unemployment
Cyprus Crisis Agreement Could Lead to Credit Crunch, High Unemployment
Reuters
Cyprus is expected to stop people taking their money out of the country but will not restrict dealings at home as it tries to avert a run on its banks after agreeing a tough rescue package with international lenders.
    
Cypriots have taken to the streets of Nicosia in thousands to protest against a bailout deal that will push their country into an economic slump and cost many their jobs.
    
European leaders said the deal averted a chaotic national bankruptcy that might have forced Cyprus out of the euro.
    
Cyprus' Finance Minister Michalis Sarris holds a news conference at the end of a Eurogroup meeting at the European Council building in Brussels, March 25, 2013.Cyprus' Finance Minister Michalis Sarris holds a news conference at the end of a Eurogroup meeting at the European Council building in Brussels, March 25, 2013.
x
Cyprus' Finance Minister Michalis Sarris holds a news conference at the end of a Eurogroup meeting at the European Council building in Brussels, March 25, 2013.
Cyprus' Finance Minister Michalis Sarris holds a news conference at the end of a Eurogroup meeting at the European Council building in Brussels, March 25, 2013.
With banks due to reopen on Thursday after nearly two weeks, Finance Minister Michael Sarris said capital controls will be "within the realms of reason'' and a business leader said he had been told they would affect only international transactions.
    
"We will look at the best way to limit the possibility of large sums of money leaving, and not imposing punitive conditions on the economy, businesses and individuals,'' Sarris told local television.
    
Speaking after meeting government officials, the head of the Cyprus chamber of commerce said: "We have been assured that limitations will not affect transactions within Cyprus at all.''

"Where there will be limitations is on what we spend abroad and also on capital outflows,'' Phidias Pelides told reporters.
    
The central bank governor said earlier that "loose'' controls would apply temporarily to all banks. Earlier, the finance minister said they could be in place for weeks. Banks have been shut since final bailout talks got under way in mid-March.
    
Russia, whose citizens have billions of euros in Cyprus and use Cypriot banks to move money around even among Russian firms, cautioned Nicosia against imposing onerous controls on healthy banks and noted that Moscow was reviewing loan terms to Cyprus.

"If there are such measures, this will not foster trust but only provoke additional problems for participants, depositors,'' Russian Finance Minister Anton Siluanov said on Tuesday.
    
He cautioned that Russian willingness to restructure and extend a 2.5-billion euro loan made to Cyprus in 2011 would depend on the island's decision on capital controls.

"We will discuss [restructuring of the loan] in the context of the decisions the parliament adopts,'' he said. "We are prepared to discuss within these parameters.''
    
State-controlled Russian bank VTB has a subsidiary in Cyprus, Russian Commercial Bank, which has not been directly affected by a bailout deal which focuses on big local banks that lost badly in the restructuring of debts in neighboring Greece.
    
Popular anger

The terms of the 10-billion euro ($13-billion) rescue from the European Union, International Monetary Fund and European Central Bank have stirred popular anger within Cyprus at the country's partners in the EU, notably Germany, the bloc's main paymaster and fiercest advocate of austerity.
    
On Tuesday, many hundreds of high school students protested at parliament, in the first major expression of popular anger since the bailout was agreed in the early hours of Monday in Brussels. The deal largely side-stepped the Cypriot parliament, and has triggered opposition calls for a referendum.

"They've just got rid of all our dreams,'' said one student, named Thomas.
    
Outside the central bank on Tuesday, about 200 employees of the country's biggest commercial lender, the Bank of Cyprus , demanded the resignation of central bank governor Panicos Demetriades, chanting "Hands off Cyprus'' and "Disgrace''.
    
Dimos Dimosthenous, a veteran Bank of Cyprus employee, said: "The bank is being driven to closure. That will be the end.''
    
A Bank of Cyprus official said its chief executive, Yiannis Kypri, had been removed on the orders of the central bank.
    
It follows the appointment of a special administrator to run the bank, which is being restructured as part of the bailout deal, and an offer to resign by its chairman, Andreas Artemis.
    
Accounts frozen

The second largest lender, Cyprus Popular Bank, also known as Laiki, is to be shut down, and accounts of under 100,000 euros and some loans will be moved to the Bank of Cyprus. Deposits at both banks over the 100,000-euro mark, which is an EU benchmark for state insurance, will be frozen.
    
Government officials have estimated that these larger depositors, many of them wealthy foreigners including Russians, could lose around 40 percent of their cash.
    
On Wednesday, the government was appointing special crisis teams of economic experts to advise ministers.
    
Many Cypriots say they do not feel reassured by the bailout deal, however, and are expected to besiege banks as soon as they reopen after a shutdown that began over a week ago.

The long closure of the banks has hurt business, according to Andreas Hadjiadamou, president of the Cyprus Supermarkets Association, who said consumer confidence had "hit the floor''.
    
Maria Benaki, who runs a family silverware business on Nicosia's biggest shopping street, said she had not had a customer in days.

"The situation is dire,'' she said. "What will happen at the end of the month when I need to pay my bills?''

You May Like

Video Protests Continue in Ferguson, Spread to Other US Cities

Missouri officials say deployment of more than 2,000 National Guard soldiers helps curb second night of rampant arson and looting in Midwestern town More

Video Ebola, Crackdown on Illegals Hit Business in Guangzhou

Chinese city has largest community of Africans in Asia More

Video Legendary Lebanese Actress, Singer Sabah Dies at 87

Music and film diva, affectionately called 'Sabbouha' by millions of her fans, performed at Carnegie Hall in New York, Royal Albert Hall in London, Olympia in Paris, Sydney Opera House in Sydney More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Changei
X
November 24, 2014 10:09 PM
Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Change

Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Mali Attempts to Shut Down Ebola Transmission Chain

Senegal and Nigeria were able to stop small Ebola outbreaks by closely monitoring those who had contact with the sick person and quickly isolating anyone with symptoms. Mali is now scrambling to do the same. VOA’s Anne Look reports from Mali on what the country is doing to shut down the chain of transmission.
Video

Video Ukraine Marks Anniversary of Deadly 1930s Famine

During a commemoration for millions who died of starvation in Ukraine in the early 1930s, President Petro Poroshenko lashed out at Soviet-era totalitarianism for causing the deaths and accused today’s Russian-backed rebels in the east of using similar tactics. VOA’s Daniel Shearf reports from Kyiv.
Video

Video Hong Kong Protests at a Crossroads

New public opinion polls in Hong Kong indicate declining support for pro-democracy demonstrations after weeks of street protests. VOA’s Bill Ide in Guangzhou and Pros Laput in Hong Kong spoke with protesters and observers about whether demonstrators have been too aggressive in pushing for change.
Video

Video US Immigration Relief Imminent for Mixed-Status Families

Tens of thousands of undocumented immigrants in the Washington, D.C., area may benefit from a controversial presidential order announced this week. It's not a path to citizenship, as some activists hoped. But it will allow more immigrants who arrived as children or who have citizen children, to avoid deportation and work legally. VOA's Victoria Macchi talks with one young man who benefited from an earlier presidential order, and whose parents may now benefit after years of living in fear.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.
Video

Video Tensions Build on Korean Peninsula Amid Military Drills

It has been another tense week on the Korean peninsula as Pyongyang threatened to again test nuclear weapons while the U.S. and South Korean forces held joint military exercises in a show of force. VOA’s Brian Padden reports from the Kunsan Air Base in South Korea.
Video

Video Mama Sarah Obama Honored at UN Women’s Entrepreneurship Day

President Barack Obama's step-grandmother is in the United States to raise money to build a $12 million school and hospital center in Kogelo, Kenya, the birthplace of the president's father, Barack Obama, Sr. She was honored for her decades of work to aid poor Kenyans at a Women's Entrepreneurship Day at the United Nations.
Video

Video Ebola Economic Toll Stirs W. Africa Food Security Concerns

The World Bank said Wednesday that it expects the economic impact of the Ebola outbreak on the sub-Saharan economy to cost somewhere betweenf $3 billion to $4 billion - well below a previously-outlined worst-case scenario of $32 billion. Some economists, however, paint a gloomier picture - warning that the disruption to regional markets and trading is considerable. Henry Ridgwell reports from London.
Video

Video Chaos, Abuse Defy Solution in Libya

The political and security crisis in Libya is deepening, with competing governments and, according to Amnesty International, widespread human rights violations committed with impunity. VOA’s Al Pessin reports from London.
Video

Video US Hosts Record 866,000 Foreign Students

Close to 900,000 international students are studying at American universities and colleges, more than ever before. About half of them come from Asia, mostly China. The United States hosts more foreign students than any other country in the world, and its foreign student population is steadily growing. Zlatica Hoke reports.

All About America

AppleAndroid