March 28, 2013

Cyprus banks re-open with limits on transactions

Menelaos Hadjicostis / The Associated Press

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People wait outside a Coop bank branch in Nicosia, Cyprus, on Thursday. Bank branches across the country were being replenished with cash, and were scheduled to open for six hours at noon.


The restrictions will be reviewed daily and are initially in place for seven days until next Wednesday. Some analysts are concerned that, if the controls are kept in place for much longer than that, Cyprus's measures will go against the fundamental principle of the single currency: Free and easy movement of money around the euro group's 17 members.

The European Commission said in a statement that EU member states could restrict financial transactions "in certain circumstances and under strict conditions on grounds of public policy or public security" but added that "the free movement of capital should be reinstated as soon as possible".

Many Cypriots were struggling to work out exactly what they could and couldn't do. Television talk shows hosted dial-ins with experts, with viewers' queries ranging from where they would repay loans to how they could pay tuition fees for children studying abroad and handle check payments. Across the country, people wondered whether they would be able to access their salaries, many of which were due this week.

"I believe this will be a very difficult day for both people and bank employees because no matter how much information there was, things were changing all the time," said Costas Kyprianides, a grocery supplier in Nicosia. "Even us traders, like myself, have so many checks which I need to deposit so I can make ends meet."

During the bank closure, ATMs were working but quickly ran out of money. Those of the two troubled banks, Laiki and Bank of Cyprus, had imposed withdrawal limits of 100 euros a day.

"Up until last night things kept on changing," said store owner Antonis Arotokritou. "There's an overall panic and uncertainty from both the bankers and the rest of the people."

Branches of the country's troubled second-largest lender, Laiki, didn't open on time due to a delay in the bank's computer system. Laiki spokesman Costas Archimandrites said there had been an initial problem with the bank's system but that it was quickly remedied. An hour after the official start of business, all branches had opened.

The stock market announced it would remain closed on Thursday "in order to ensure the smooth functioning of the stock market and protect investors." It too has been closed since March 16.


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