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Cyprus to reopen banks - but imposes restrictions

By Catholic Online (NEWS CONSORTIUM)
March 27th, 2013
Catholic Online (www.catholic.org)

After weeks of financial turmoil, the nation of Cyprus will reopen its banks on Thursday while limiting withdrawals, banning checks and curbing the use of Cypriot credit cards abroad. These tough new rules come after measures were imposed to avert a bank run after it agreed a tough rescue deal with international lenders.

LOS ANGELES, CA (Catholic Online) - The announcements come nearly two weeks after Cypriots could only get cash through limited ATM withdrawals. However, a central bank official said Cypriots would be allowed to withdraw no more than $380 in U.S. dollars daily.

Head of internal audit at the Central Bank Yiangos Demetriou declared that the controls would allow unlimited use of credit cards within Cyprus, but set a limit of 5,000 euros per month abroad. Demetriou said the measures would last four days.

As was leaked to the Greek newspaper Kathimerini, Cypriots would not be permitted to send money overseas without documentation showing they are paying for imports.

In addition, those travelling abroad could take a maximum of 3,000 euros on each trip, according to the draft. Early withdrawals of funds deposited with banks for a fixed term would be banned.

The European Central Bank delivered extra banknotes to Cypriot banks to meet public demand, a source familiar with the situation said.

Finance Minister Michael Sarris has said capital controls will be "within the realms of reason." Cypriots, fearing for their savings and angered by the bailout deal struck this week in Brussels are expected to inundate banks.

Cyprus's second largest bank will be closed and its guaranteed deposits of up to 100,000 euros transferred to the biggest bank under the agreement. Deposits of more than 100,000 euros at both banks would be frozen.

Authorities say deposits up to 100,000 euros will be protected, a reversal from an earlier plan that would have hit small depositors as well.

Cypriots have taken to the streets of Nicosia in the thousands to protest against a bailout deal that will push their country into an economic slump and cost many their jobs.

"I'll pay nothing; I owe nothing," protest banners have read.

European leaders said the bailout deal averted a chaotic national bankruptcy that might have forced Cyprus out of the euro.

"We have been assured that limitations will not affect transactions within Cyprus at all," Speaking after meeting government officials, the head of the Cyprus chamber of commerce said. "Where there will be limitations is on what we spend abroad and also on capital outflows," Phidias Pelides told reporters.

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