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

    US-Russia Tensions Complicate Syria War

    With a shared enemy and opposing allies, Russia and the US are working to avoid confrontation

    Video Re-opening Old Wounds in Beirut's Bullet-riddled Yellow House

    Built in neo-Ottoman style in 1920s, it is set to be re-opened in Sept. as ‘memory museum’ - bullet-riddled walls and bunkered positions overlooking city’s notorious ‘Green Line’ maintained for posterity

    Cambodian-Americans Lobby for Human Rights Resolution

    Resolution condemns all forms of political violence in Cambodia, urges Cambodian government to end human rights violations, calls for respect of press freedom

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Brexit Vote Plunges Global Markets Into Uncharted Territoryi
    X
    June 24, 2016 9:38 PM
    British voters plunged global markets into unknown territory after they voted Thursday to leave the European Union. The results of the Brexit vote, the term coined to describe the referendum, caught many off guard. Analysts say the resulting volatility could last for weeks, perhaps longer. Mil Arcega reports.
    Video

    Video Brexit Vote Plunges Global Markets Into Uncharted Territory

    British voters plunged global markets into unknown territory after they voted Thursday to leave the European Union. The results of the Brexit vote, the term coined to describe the referendum, caught many off guard. Analysts say the resulting volatility could last for weeks, perhaps longer. Mil Arcega reports.
    Video

    Video Orlando Shooting Changes Debate on Gun Control

    It’s been nearly two weeks since the largest mass shooting ever in the United States. Despite public calls for tighter gun control laws, Congress is at an impasse. Democratic lawmakers resorted to a 1960s civil rights tactic to portray their frustration. VOA’s Carolyn Presutti explains how the Orlando, Florida shooting is changing the debate.
    Video

    Video Tunisian Fishing Town Searches for Jobs, Local Development Solutions

    As the European Union tries to come to grips with its migrant crisis, some newcomers are leaving voluntarily. But those returning to their home countries face an uncertain future.  Five years after Tunisia's revolution, the tiny North African country is struggling with unrest, soaring unemployment and plummeting growth. From the southern Tunisian fishing town of Zarzis, Lisa Bryant takes a look for VOA at a search for local solutions.
    Video

    Video 'American Troops' in Russia Despite Tensions

    Historic battle re-enactment is a niche hobby with a fair number of adherents in Russia where past military victories are played-up by the Kremlin as a show of national strength. But, one group of World War II re-enactors in Moscow has the rare distinction of choosing to play western ally troops. VOA's Daniel Schearf explains.
    Video

    Video Experts: Very Few Killed in US Gun Violence Are Victims of Mass Shootings

    The deadly shooting at a Florida nightclub has reignited the debate in the U.S. over gun control. Although Congress doesn't provide government health agencies funds to study gun violence, public health experts say private research has helped them learn some things about the issue. VOA's Carol Pearson reports.
    Video

    Video Trump Unleashes Broadside Against Clinton to Try to Ease GOP Doubts

    Recent public opinion polls show Republican Donald Trump slipping behind Democrat Hillary Clinton in the presidential election matchup for November. Trump trails her both in fundraising and campaign organization, but he's intensifying his attacks on the former secretary of state. VOA National Correspondent Jim Malone reports.
    Video

    Video Muslim American Mayor Calls for Tolerance

    Syrian-born Mohamed Khairullah describes himself as "an American mayor who happens to be Muslim." As the three-term mayor of Prospect Park, New Jersey, he believes his town of 6,000 is an example of how ethnicity and religious beliefs should not determine a community's leadership. Ramon Taylor has this report from Prospect Park.
    Video

    Video Internal Rifts Over Syria Policy Could Be Headache for Next US President

    With the Obama administration showing little outward enthusiasm for adopting a more robust Syria policy, there is a strong likelihood that the internal discontent expressed by State Department employees will roll over to the next administration. VOA State Department correspondent Pam Dockins reports.
    Video

    Video Senegal to Park Colorful ‘Cars Rapide’ Permanently

    Brightly painted cars rapide are a hallmark of Dakar, offering residents a cheap way to get around the capital city since 1976. But the privately owned minibuses are scheduled to be parked for good in late 2018, as Ricci Shryock reports for VOA.
    Video

    Video Florida Gets $1 Million in Emergency Government Funding for Orlando

    The U.S. government has granted $1 million in emergency funding to the state of Florida to cover the costs linked to the June 12 massacre in Orlando. U.S. Attorney General Loretta Lynch announced the grant Tuesday in Orlando, where she met with survivors of the shooting attack that killed 49 people. Zlatica Hoke reports.
    Video

    Video How to Print Impossible Shapes with Metal

    3-D printing with metals is rapidly becoming more advanced. As printers become more affordable, the industry is partnering with universities to refine processes for manufacturing previously impossible things. A new 3-D printing lab aims to bring the new technology closer to everyday use. VOA's George Putic reports.
    Video

    Video Big Somali Community in Minnesota Observes Muslim Religious Feast

    Ramadan is widely observed in the north central US state of Minnesota, which a large Muslim community calls home. VOA Somali service reporter Mohmud Masadde files this report from Minneapolis, the state's biggest city.

    Special Report

    Adrift The Invisible African Diaspora