Cyprus has "contained" the risk of bankruptcy in the wake of a tough rescue package with the EU and has no intention of leaving the euro, the island's president insisted this morning.
Conservative leader Nicos Anastasiades assured Cypriots and wealthy foreign depositors that restrictions on bank transactions, imposed this week, would gradually be lifted, but gave no time frame.
He hit out at banking authorities in Cyprus and Europe for pouring money into a crippled Cypriot bank that now faces closure under the terms of a €10bn bailout plan that averted the immediate risk of financial meltdown.
"How serious were those authorities that permitted the financing of a bankrupt bank to the highest possible amount?" Anastasiades said during a speech to civil servants in the capital, Nicosia.
"I don't want to say more," he added. "Now is not the time to say who bears more or less of the blame."
Anastasiades clinched the last-ditch bailout in Brussels five days ago, but has faced a backlash from Cypriots angry at the price that came with it - the winding down of the island's second-largest bank, Cyprus Popular Bank or Laiki, and a raid on deposits over €100,000 that could spell the end of Cyprus as a hub for offshore finance.
The country faces steep job losses and a prolonged and deep recession.
The president, barely a month in the job and wrestling with Cyprus's worst crisis since a 1974 war split the island in two, accused the 17-nation euro currency bloc of making "unprecedented demands that forced Cyprus to become an experiment".
But he added: "We have no intention of leaving the euro. In no way will we experiment with the future of our country."
He said the immediate danger of national bankruptcy had been averted, and that, "The situation, despite the tragedy of it all, is contained."
Warnings of a stampede at banks when they reopened yesterday proved unfounded.
For almost two weeks, Cypriots were on a ration of limited withdrawals from bank cash machines. Even with banks now open, they face a regime of strict restrictions designed to halt a flight of capital from the island.
The move is unprecedented since euro coins and banknotes came into circulation in 2002, and flies in the face of the bloc's founding principle of the free movement of money and goods.
Cyprus's difficulties have sent jitters around the fragile single European currency zone.
The imposition of capital controls has led economists to warn that a second-class "Cyprus euro" could emerge, with funds trapped on the island worth less than euros that can be freely spent abroad.
"The temporary restrictive measures adopted concerning economic transactions will be gradually eased until we can return to normal," Anastasiades said.
Under a government decree, the capital controls are intended to last for seven days.
Foreign Minister Ioannis Kasoulides said yesterday they could last "about a month", but economists warn it could be years before confidence in the Cypriot economy bounces back enough to lift the restrictions.
Cypriot authorities said today that cheques could be used to make payments to government agencies up to a limit of €5,000, easing an original blanket ban on cheque payments. Anything more than €5,000 would require Central Bank approval.