Cyprus Banks Reopen

Cyprus Banks Reopen

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 “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.