Almost a year after Cyprus put daily limits on withdrawals to prevent a run on the banks following the confiscation of 47.5 percent of accounts over 100,000 euros, the government said it will next week begin to roll back on the capital controls stifling business and undermining faith in the battered banking system.
Finance Minister Harris Georgiades said that the controls would be “significantly” relaxed although he didn’t say what the new ceiling would be. Customers now can take out only 300 euros ($409) daily while businesses have higher but still strict thresholds they complain have cut into their liquidity and ability to operate.
Other conditions also included emergency controls on the movement of capital, including money transfers and cash withdrawals to prevent a collapse of its financial system. It has been gradually relaxing those controls ever since but the banks have seen regular small bleeding of accounts as customers fear more of their money will be confiscated to pay for the mistakes of the banks.
The institutions lost 4.5 billion euros ($6.13 billion) in bad loans to Greek businesses and in Greek bonds devalued 74 percent. No banker has been charged with any wrongdoing or held to account for the decisions which nearly destroyed the country’s economy.
Speaking to reporters, Finance Minister Harris Georgiades also said a review by its international lenders, the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) which put up 10 billion euros in loans but demanded tight austerity measures was going well and that “significant progress” in talks was achieved.
To get the money, the government had to find 13 billion euros ($17.73 billion) in revenues or cuts that led to the bank account seizures, unprecedented for a European Union country.