Calm in Cyprus as banks re-open with tight security

Don't think that politicians in Europe aren't watching the reaction of citizens in Cyprus to the re-opening of banks after a 12 day holiday, with strict capital controls. By all reports, things are calm and since there is a 300 euro limit for withdrawals a week, there hasn't been a run on deposits.

Resignation seems to be the mood of the people, as the BBC reports:

Branches began to open at noon local time (10:00 GMT) and will close at 18:00 (16:00 GMT).

Some did not open on time, causing tension among customers. The longer queues were forming outside branches of Laiki, which is being wound up.

One customer in a queue in Nicosia told the BBC's Tim Willcox he was withdrawing the allowed daily amount of 300 euros ($383; £253) but would take out all of his money if he could.

Our correspondent says the predictions of a stampede did not materialise and in some places there were more journalists than depositors.

Another customer, jewellery shop owner, Roula Spyrou, told AFP news agency: "There's going to be queues so I'm not going to spend so many hours there to get 300 euros."

Some armed police have been deployed in cities and hundreds of staff from the private security firm G4S are guarding bank branches and helping to transport money.

The stock exchange, shut since 16 March, remains closed on Thursday and will not reopen until after Easter.

In a statement issued on Wednesday, the ministry of finance insisted the capital control measures were temporary and were needed to "safeguard the stability of the system".

It read: "The Central Bank of Cyprus and the government of Cyprus will review them each day, with a view to progressive lifting of the measures as soon as circumstances allow. "

The severe new rules have been imposed to prevent a torrent of money leaving the island and credit institutions collapsing.

As well as the daily withdrawal limit, Cypriots may not cash cheques.

Payments and/or transfers outside Cyprus via debit and or credit cards are allowed up to 5,000 euros per person per month.

Transactions of 5,000-200,000 euros will be reviewed by a specially established committee, with applications for those over 200,000 euros needing individual approval.

Travellers leaving the country will only be allowed to take 1,000 euros with them.

For all sorts of technical and structural reasons, many experts say this couldn't happen in the US. I'm sure they're right - at least as far as all the safeguards that have been put in place.

But what we've seen in Cyprus is that safeguards don't mean a damn. The EU violated its own charter to get this deal done. And as we've seen in the US, if government is set on a course of action, regardless of its legality, they generally can get what they want.

Perception and faith is what sustains the international monetary system. What happens when those buttresses are lost?

I don't think we want to know.


Don't think that politicians in Europe aren't watching the reaction of citizens in Cyprus to the re-opening of banks after a 12 day holiday, with strict capital controls. By all reports, things are calm and since there is a 300 euro limit for withdrawals a week, there hasn't been a run on deposits.

Resignation seems to be the mood of the people, as the BBC reports:

Branches began to open at noon local time (10:00 GMT) and will close at 18:00 (16:00 GMT).

Some did not open on time, causing tension among customers. The longer queues were forming outside branches of Laiki, which is being wound up.

One customer in a queue in Nicosia told the BBC's Tim Willcox he was withdrawing the allowed daily amount of 300 euros ($383; £253) but would take out all of his money if he could.

Our correspondent says the predictions of a stampede did not materialise and in some places there were more journalists than depositors.

Another customer, jewellery shop owner, Roula Spyrou, told AFP news agency: "There's going to be queues so I'm not going to spend so many hours there to get 300 euros."

Some armed police have been deployed in cities and hundreds of staff from the private security firm G4S are guarding bank branches and helping to transport money.

The stock exchange, shut since 16 March, remains closed on Thursday and will not reopen until after Easter.

In a statement issued on Wednesday, the ministry of finance insisted the capital control measures were temporary and were needed to "safeguard the stability of the system".

It read: "The Central Bank of Cyprus and the government of Cyprus will review them each day, with a view to progressive lifting of the measures as soon as circumstances allow. "

The severe new rules have been imposed to prevent a torrent of money leaving the island and credit institutions collapsing.

As well as the daily withdrawal limit, Cypriots may not cash cheques.

Payments and/or transfers outside Cyprus via debit and or credit cards are allowed up to 5,000 euros per person per month.

Transactions of 5,000-200,000 euros will be reviewed by a specially established committee, with applications for those over 200,000 euros needing individual approval.

Travellers leaving the country will only be allowed to take 1,000 euros with them.

For all sorts of technical and structural reasons, many experts say this couldn't happen in the US. I'm sure they're right - at least as far as all the safeguards that have been put in place.

But what we've seen in Cyprus is that safeguards don't mean a damn. The EU violated its own charter to get this deal done. And as we've seen in the US, if government is set on a course of action, regardless of its legality, they generally can get what they want.

Perception and faith is what sustains the international monetary system. What happens when those buttresses are lost?

I don't think we want to know.


RECENT VIDEOS