Cyprus To Lift Capital Controls Soon

NICOSIA – A year after Cyprus instituted capital controls as part of an international bailout to save the country’s banks and economy, Cyprus Finance Minister Harris Georgiades said he expects they will be lifted by the end of spring.

Georgiades said that there would be further steps at the end of the month and later in the spring following a February decree that eased domestic capital restrictions.

The controls were put in place after the government confiscated 47.5 percent of bank accounts over 100,000 euros ($137,000) which made depositors bank for mistakes of the banks, which lost 4.5 billion euros due to big holdings in devalued Greek bonds and bad loans to failed Greek businesses.

A major bank, Laiki, was closed and the bailout terms sparked furious protests outside the Bank of Cyprus and the Parliament, to no avail.

A Feb. 12 Finance Ministry decree scrapped the compulsory automatic renewal of fixed term deposits and increased the allowance on domestic cash transfers for both companies and individuals.

A ban on cashing in checkss and a 300 euro cash withdrawal limit daily remained in force, cumulative from March 27, 2013.

Cyprus was the first Eurozone member state to impose capital controls to prevent a run on the banks after it seized deposits and to keep the banks afloat as part of a 10 billion euro bailout from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB).

The temporary decree, valid for 35 days, increases the allowance on cash transfers to 20,000 euros for individuals, and 100,000 for companies on a monthly basis, irrespective of purpose. The previous limit was 15,000 euros, and 75,000 euros respectively.