News / Europe

    Cyprus Banks to Reopen with Restrictions on Withdrawals

    Cyprus Central Bank Governor Panicos Demetriades (L) and Cypriot Finance Minister Michael Sarris listen to reporters' questions during a news conference at the Central Bank of Cyprus in Nicosia, Mar. 26, 2013.
    Cyprus Central Bank Governor Panicos Demetriades (L) and Cypriot Finance Minister Michael Sarris listen to reporters' questions during a news conference at the Central Bank of Cyprus in Nicosia, Mar. 26, 2013.
    VOA News
    Cyprus is imposing unprecedented controls on Cypriot bank depositors withdrawing or moving their money, as it prepares to reopen its banks Thursday.

    Cypriot Finance Minister Michael Sarris says the controls are necessary to restore confidence in the island nation's banking system.

    Cyprus Bailout

    • Agreed to on March 25
    • Worth $13 billion
    • Keeps Cyprus in the eurozone
    • Closes the island nation's second largest bank - Laiki Bank
    • Laiki accounts larger than $130,000 will be moved to a "bad bank" and used to raise bailout money
    • Laiki accounts with less than $130,000 euros will be moved to Bank of Cyprus
    • Bank of Cyprus will be restructured
    ""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," said Sarris.  

    Cyprus said travelers leaving the Mediterranean island can take no more than $3,831 to other countries. The restriction comes after Cyprus, one of 17 eurozone nations, secured 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.

    One global economics expert, Nicolas Veron of the Peterson Institute for International Economics in Washington, told VOA the controls are the "very sad consequence of the terrible blunder" made by European policy makers earlier this month to tax all Cypriot bank accounts, not just the largest ones. The Cypriot parliament rejected that policy, but the government agreed to the tax on the biggest accounts.

    Now, Veron says, the controls are necessary.

    He said, “If you don’t impose capital controls, you are sure to have something like a bank run in Cyprus in a disorderly manner.”

    Cyprus says the controls will initially be in place for a week, but Veron says he thinks it will be much longer, perhaps several months.

    ““I think the destruction of trust is with us, and it will be a long time before confidence can be restored in a way that is compatible with the lifting of capital controls,” said Veron.

    Cypriot Andrea Kyriakou, 81, carries bags of food distributed to her by the Orthodox church of Cyprus' community charity kitchen in Nicosia, Mar. 27, 2013.Cypriot Andrea Kyriakou, 81, carries bags of food distributed to her by the Orthodox church of Cyprus' community charity kitchen in Nicosia, Mar. 27, 2013.
    x
    Cypriot Andrea Kyriakou, 81, carries bags of food distributed to her by the Orthodox church of Cyprus' community charity kitchen in Nicosia, Mar. 27, 2013.
    Cypriot Andrea Kyriakou, 81, carries bags of food distributed to her by the Orthodox church of Cyprus' community charity kitchen in Nicosia, Mar. 27, 2013.
    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. Cyprus said late Wednesday it is increasing the limit from $128 to $383. But the uncertainty of the bank closures 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," said Antoniou.

    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 Cyprus 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.

    Some information for this report was provided by AP and AFP.

    You May Like

    Video As Refugees Perish, Greek Graveyards Fill

    Before burial at overflowing cemeteries, unidentified dead being swapped for DNA, in case some day relatives come to learn their fate

    Russian Opposition Leader Sues Putin for Conflict of Interest

    Alexei Navalny tells VOA in exclusive interview why transfer of $2 billion from country’s wealth fund to company with ties to President Putin’s son-in-law triggered lawsuit

    How Diversity Has Changed America

    Over the past four decades, the level of diversity in the United States has increased most in these four states

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    As Refugees Perish, Greek Graveyards Filli
    X
    Hamada Elsaram
    February 11, 2016 8:01 PM
    Aid workers on the Greek island of Lesbos say they are struggling to bury the increasing number of bodies of refugees that have been recovered or washed up ashore in recent months.  The graveyards are all full, they say, yet as tens of thousands of people clamor to get out of Syria, it is clear refugees will still be coming in record numbers. For VOA, Hamada Elrasam reports from Lesbos, Greece.
    Video

    Video As Refugees Perish, Greek Graveyards Fill

    Aid workers on the Greek island of Lesbos say they are struggling to bury the increasing number of bodies of refugees that have been recovered or washed up ashore in recent months.  The graveyards are all full, they say, yet as tens of thousands of people clamor to get out of Syria, it is clear refugees will still be coming in record numbers. For VOA, Hamada Elrasam reports from Lesbos, Greece.
    Video

    Video To Fight Zika, Scientists Target Mosquitoes

    Mosquitoes strike again. The Zika virus outbreak is just the latest headline-grabbing epidemic carried by these biting pests, but researchers are fighting back with new ways to control them. VOA's Steve Baragona takes a look.
    Video

    Video Mosul Refugees Talk About Life Under IS

    A top U.S. intelligence official told Congress this week that a planned Iraqi-led operation to re-take the city of Mosul from Islamic State militants is unlikely to take place this year. IS took over the city in June 2014, and for the past year and a half, Mosul residents have been held captive under its rule. VOA's Zana Omar talked to some families who managed to escape. Bronwyn Benito narrates his report.
    Video

    Video Scientists Make Progress Toward Better Diabetes Treatment, Cure

    Scientists at two of the top U.S. universities say they have made significant advances in their quest to find a more efficient treatment for diabetes and eventually a cure. According to the International Diabetes Federation, the disease affects more than 370 million people worldwide. VOA’s George Putic reports.
    Video

    Video NATO to Target Migrant Smugglers

    NATO has announced plans to send warships to the Aegean Sea to target migrant smugglers in the alliance's most direct intervention so far since a wave of people began trying to reach European shores.
    Video

    Video Russia's Catholics, Orthodox Hopeful on Historic Pope-Patriarch Meeting

    Russia's Catholic minority has welcomed an historic first meeting Friday in Cuba between the Pope and the Patriarch of Russia's dominant Orthodox Church. The Orthodox Church split with Rome in 1054 and analysts say politics, both church and state, have been driving the relationship in the centuries since. VOA's Daniel Schearf reports from Moscow.
    Video

    Video Used Books Get a New Life on the Streets of Lagos

    Used booksellers are importing books from abroad and selling them on the streets of Africa's largest city. What‘s popular with readers may surprise you. Chris Stein reports from Lagos.
    Video

    Video After NH Primaries All Eyes on South Carolina

    After Tuesday's primary in New Hampshire, US presidential candidates swiftly turned to the next election coming up in South Carolina. The so-called “first-in-the-South” poll may help further narrow down the field of candidates. Zlatica Hoke reports.
    Video

    Video US Co-ed Selective Service Plan Stirs Controversy

    Young women may soon be required to register with the U.S. Selective Service System, the U.S. government agency charged with implementing a draft in a national emergency. Top Army and Marine Corps commanders told the Senate Armed Services Committee recently that women should register, and a bill has been introduced in Congress requiring eligible women to sign up for the military draft. The issue is stirring some controversy, as VOA’s Bernard Shusman reports from New York.
    Video

    Video Lessons Learned From Ebola Might Help Fight Zika

    Now that the Ebola epidemic has ended in West Africa, Zika has the world's focus. And, as Carol Pearson reports, health experts and governments are applying some of the lessons learned during the Ebola crisis in Africa to fight the Zika virus in Latin America and the Caribbean.
    Video

    Video Smartphone Helps Grow Vegetables

    One day, you may be using your smartphone to grow your vegetables. A Taipei-based company has developed a farm cube — a small, enclosed ecosystem designed to grow plants indoors. The environment inside is automatically adjusted by the cube, but it can also be controlled through an app. VOA's Deborah Block has more on the gardening system.
    Video

    Video Illinois Voters Have Mixed Emotions on Obama’s Return to Springfield

    On the ninth anniversary of the launch of his quest for national office, President Barack Obama returned to Springfield, Illinois, to speak to the Illinois General Assembly, where he once served as state senator. His visit was met with mixed emotions by those with a front-row seat on his journey to the White House. VOA's Kane Farabaugh reports.
    Video

    Video Exhibit Turns da Vinci’s Drawings Into Real Objects

    In addition to being a successful artist, Renaissance genius Leonardo da Vinci designed many practical machines, some of which are still in use today, although in different forms. But a number of his projects were never realized — until today. VOA’s George Putic reports.
    Video

    Video Heated Immigration Debate Limits Britain’s Refugee Response

    Compared to many other European states, Britain has agreed to accept a relatively small number of Syrian refugees. Just over a thousand have arrived so far -- and some are being resettled in remote corners of the country. Henry Ridgwell reports on why Britain’s response has lagged behind its neighbors.
    Video

    Video Russia's Car Sales Shrink Overall, But Luxury and Economy Models See Growth

    Car sales in Russia dropped by more than a third in 2015 because of the country's economic woes. But, at the extreme ends of the car market, luxury vehicles and some economy brands are actually experiencing growth. VOA's Daniel Schearf reports from Moscow.