Cyprus gets tough to stop run on banks
Cyprus has imposed draconian capital controls including a total ban on cheques and a €300 daily limit on cash withdrawals in a bid to stem panic when the country's banks re-open today.
The measures were designed to prevent a run on the banks after a tumultuous two weeks in which Cypriots learnt they would lose billions of euros from accounts in an accord drawn up by the government to secure a €10bn bailout from the troika.
After confirming that banks will open for six hours today from midday, the island's central bank said that cashing of cheques will be banned and bank withdrawals limited to €300 a day.
A spokesman said that the effectiveness of the controls would be evaluated on a daily basis, but a leak of the details to a Greek newspaper, 'Kathimerini', said that the curbs would stay in place for at least a week. It also suggested that:
• Cypriots wanting to send money overseas would have to prove that the transactions met rules laid out by the authorities.
• Use of credit and debit cards overseas would be restricted to €5,000 a month.
• Cypriots travelling abroad would be allowed to take a maximum of €3,000 on each trip.
• Those with children studying abroad will be allowed to transfer €10,000 each quarter to pay for tuition and living costs.
• Savers with fixed-term funds will not be able to withdraw the cash early.
Businesses and individuals with more than €100,000 are already in for a huge hit under the terms of the bail-out and could see at least 40pc of their savings forcibly converted into bank shares. The two worst-hit lenders are Laiki Bank, which is to be dissolved, and Bank of Cyprus, which will absorb Laiki's assets.
The government, fearing there could be chaos and even violence when banks finally re-open, are to step up security to protect bank staff. (© Daily Telegraph, London)