After being closed for almost two weeks, Cyprus banks are set to reopen today between 12pm and 6pm local time (10:00-16:00 GMT).
The stock exchange is not due to open until after the Easter holiday, having been closed since the 16th of March.
Banks were provided with cash overnight in preparation of their reopening, but strict capital controls have been imposed in order to counteract a bank run. Preventative measures include the deployment of armed police to bank branches throughout the country and private security firm G4S is also providing staff.
Cyprus is the first Eurozone member to implement capital controls. These restrictions actually oppose EU principles on the free movement of capital which are in place to protect public interests. However, both the Cypriot Ministry of Finance and European Commission have recognised the need for such controls in order to “safeguard the stability of the system”. The temporary controls have been sanctioned by the European Commission as “a matter of overriding public interest”.
The main points of the capital controls in Cyprus include:
- A daily withdrawal limit of €300
- Prohibition or cashing cheques
- A limit of €1000 when travelling abroad
- Business transactions limited to €5,000 per day
- A limit of €5,000 per month for debit and credit card payments and transfers outside of Cyprus
- Review of commercial transactions between €5,000 and €200,000 by a special committee
The Cypriot government and Central Bank of Cyprus hope these capital controls will prevent further damage to the country and its banking sector. Frequent reviews of the controls will be made and progressively lifted as soon as the situation stabilises.
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The reopening of Cyprus banks marked a critical step in restoring confidence in the country’s financial system. While the imposition of capital controls was unprecedented in the Eurozone, these temporary measures were essential to safeguard stability and protect the interests of both residents and international investors. Despite restrictions such as daily withdrawal limits, caps on transfers abroad, and monitoring of large commercial transactions, Cyprus has shown its determination to recover and rebuild its financial credibility.
For businesses and investors, this moment underscores two key points: resilience and opportunity. Even in times of crisis, Cyprus continues to maintain its position as a strategic hub for international trade and investment. Its advantageous corporate tax rate, robust intellectual property regime, and extensive network of double taxation treaties remain firmly in place, ensuring Cyprus stays competitive on the global stage.
At Open A European Company, we help businesses navigate both challenges and opportunities in Cyprus. Whether you are establishing a new company, restructuring your operations, or seeking compliant banking solutions, our experts provide the guidance you need to succeed.
Take advantage of Cyprus’ resilience, partner with us today, and expand your business in one of Europe’s most strategically located economies.
