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Cyprus Finance Ministry amends capital controls decree, restricts transfers again

Published time: April 13, 2013 15:39
People queue up outside a Laiki bank branch in the Cypriot capital, Nicosia (AFP Photo / Patrick Baz)

People queue up outside a Laiki bank branch in the Cypriot capital, Nicosia (AFP Photo / Patrick Baz)

The Finance Ministry of Cyprus made its seventh urgent amendment to a decree on capital controls, mandating that only payments of up to €300,000 are allowed, and that bank transfers of that size are prohibited.

The Friday amendment was made following consultation with the Central Bank of Cyprus, and was prompted by the massive capital flows following the April 11 decree that allowed clients to transfer money out of the bank to other financial institutions. Depositors also rushed to split up their accounts in order to avoid the forthcoming levies on large holdings.

As a result, restrictions on cross-bank transfers have been imposed, limiting them to €2,000 for individuals and €10,000 for legal entities. Also, these transfers may now only be made once a month. Furthermore, the ministry stipulated that bank clients may not open new accounts in other financial institutions.

The updated decree, which will be in effect for seven days, also prohibits cross-border transfers. Exceptions include paying wages to employees of foreign companies and covering education costs, and require confirmation documents in each case.

Customers are still only allowed to withdraw €300 a day from ATMs. Those going abroad can take only €2,000 in cash with them, and may only spend up to €5,000 abroad in debit card payments.

The capital controls measures have been temporarily imposed in Cyprus since March 27, in light of the island nation's dire financial circumstances, following nearly two weeks of bank 'holidays.' They came as the country’s government moved to enforce the controversial conditions of a €10-billion bank bailout from the eurozone and the International Monetary Fund.

Anger has mounted in the country since investors learned that bank deposits over €100,000 will see at least 37.5 percent of their value converted into bank shares, which also led to an erosion of confidence in country’s banking system and a danger of mass cross-border transfers by frustrated clients.

Comments (15)

Anonymous user 15.04.2013 05:31

Can u see how stupidly simple this recession is. Let the banks fail and watch what happens :-)

Anonymous user 15.04.2013 05:29

To stop the recession and to kick start, we need to let all the banks collapse.but goverment tax us

Anonymous user 15.04.2013 05:28

The only reason why world is in recession is because we are ALL keeping the major banks from failing

View all comments (15)
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