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

FIFA Indictments Put Gold Cup Tournament Under Cloud

Experts say US indictments could lead to charges of other world soccer officials, and lead to major shakeup in sport's governance More

Video Seoul Sponsors Korean Unification Fair

At a recent even in Seoul, border communities promoted benefits of increased cooperation and North Korean defectors shared stories of life since the war More

Video VOA EXCLUSIVE: Iraq President Vows to Fight IS 'Until They Are Killed or We Die'

In wide-ranging interview with VOA Persian service reporter, Fuad Masum describes conflict as new type of fight that will take time to win More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Expelled from Pakistan, Afghan Refugees Return to Increased Hardshipi
X
Ayesha Tanzeem
May 28, 2015 6:48 PM
Undocumented refugees returning to Afghanistan from Pakistan have no jobs, no support system, and no home return to, and international aid agencies say they and the government are overwhelmed and under-resourced. Ayesha Tanzeem has more from Kabul.
Video

Video Expelled from Pakistan, Afghan Refugees Return to Increased Hardship

Undocumented refugees returning to Afghanistan from Pakistan have no jobs, no support system, and no home return to, and international aid agencies say they and the government are overwhelmed and under-resourced. Ayesha Tanzeem has more from Kabul.
Video

Video Britain Makes Controversial Move to Crack Down on Extremism

Britain is moving to tighten controls on extremist rhetoric, even when it does not incite violence or hatred -- a move that some are concerned might unduly restrict basic freedoms. It is an issue many countries are grappling with as extremist groups gain power in the Middle East, fueled in part by donations and fighters from the West. VOA’s Al Pessin reports from London.
Video

Video Floodwaters Recede in Houston, but Rain Continues

Many parts of Texas are recovering from one of the worst natural disasters to hit the southwestern state. Heavy rains on Monday and early Tuesday caused rivers to swell in eastern and central Texas, washing away homes and killing at least 13 people. As VOA’s Greg Flakus reports from Houston, floodwaters are receding slowly in the country's fourth-largest city, and there likely is to be more rain in the coming days.
Video

Video 3D Printer Makes Replica of Iconic Sports Car

Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video Al-Shabab Recruitment Drive Still on In Kenya

The al-Shabab militants that have long battled for control of Somalia also have recruited thousands of young people in Kenya, leaving many families disconsolate. Mohammed Yusuf recently visited the Kenyan town of Isiolo, and met with relatives of those recruited, as well as a many who have helped with the recruiting.
Video

Video US Voters Seek Answers From Presidential Candidates on IS Gains

The growth of the Islamic State militant group in Iraq and Syria comes as the 2016 U.S. presidential campaign kicks off in the Midwest state of Iowa.   As VOA’s Kane Farabaugh reports, voters want to know how the candidates would handle recent militant gains in the Middle East.
Video

Video A Small Oasis on Kabul's Outskirts Provides Relief From Security Tensions

When people in Kabul want to get away from the city and relax, many choose Qargha Lake, a small resort on the outskirts of Kabul. Ayesha Tanzeem visited and talked with people about the precious oasis.
Video

Video Film Festival Looks at Indigenous Peoples, Culture Conflict

A recent Los Angeles film festival highlighted the plight of people caught between two cultures. Mike O'Sullivan has more on the the Garifuna International Film Festival, a Los Angeles forum created by a woman from Central America who wants the world to know more about her culture.
Video

Video Kenyans Lament Losing Sons to al-Shabab

There is agony, fear and lost hope in the Kenyan town of Isiolo, a key target of a new al-Shabab recruitment drive. VOA's Mohammed Yusuf visits Isiolo to speak with families and at least one man who says he was a recruiter.
Video

Video Scientists Say Plankton More Important Than Previously Thought

Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video Kenya’s Capital Sees Rise in Shisha Parlors

In Kenya, the smoking of shisha, a type of flavored tobacco, is the latest craze. Patrons are flocking to shisha parlors to smoke and socialize. But the practice can be addictive and harmful, though many dabblers may not realize the dangers, according to a new review. Lenny Ruvaga has more on the story for VOA from Nairobi, Kenya.
Video

Video Iowa Family's Sacrifice Shaped US Military Service for Generations

Few places in America have experienced war like Waterloo. This small town in the Midwest state of Iowa became famous during World War II not for what it accomplished, but what it lost. As VOA’s Kane Farabaugh reports, the legacy of one family’s sacrifice is still a reminder today of the real cost of war for all families on the homefront.

VOA Blogs