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First day for Cyprus' reopened banks passes calmly

March 28, 2013|By Anthee Carassava
  • People wait in line outside the Laiki Bank branch in Limassol, Cyprus, on Thursday. All of the country's 26 banks were open for the first time in nearly two weeks, with restrictions on withdrawals.
People wait in line outside the Laiki Bank branch in Limassol, Cyprus, on… (European Pressphoto Agency )

ATHENS -- After being locked out of their banks for nearly two weeks, the people of bailed-out Cyprus finally had access to their financial institutions Thursday, lining up to withdraw cash but maintaining calm and order despite fears by authorities of potential unrest.

The government deployed police and security guards throughout the island to head off any outbreaks of violence among a populace desperate to transact business and tap their savings after a tumultuous two weeks that saw Cyprus teeter on the edge of bankruptcy. Banks remained shuttered during that time to prevent a run on their reserves.

They reopened Thursday with a number of restrictions in place to prevent a massive flight of capital. Depositors are limited to $384 in cash withdrawals each day. Officials also slapped a cap of $6,300 on transactions with other countries and banned cashing checks and terminating fixed-term cash deposits before their maturity date.

In a statement issued by his office, President Nicos Anastasiades thanked his compatriots for "the maturity and spirit of responsibility they have shown at a critical time for the stability of the Cypriot economy," according to the Associated Press.

Cyprus’ finance ministry says that the capital controls -- which are unprecedented in the 17-nation Eurozone -- will be in place for seven days, but many analysts think they will last longer.

Many Cypriots have been worried their savings will be raided by the government in its attempt to raise billions of dollars to qualify for a bailout from its European partners and the International Monetary Fund. A plan to tax all bank deposits up to nearly 10% caused widespread outrage before lawmakers rejected the proposal.

The government later decided that only accounts with more than 100,000 euros ($128,000 at the current exchange rate) are to be docked in its effort to come up with $7.5 billion. But officials have yet to specify how much the levy will be.

With fewer than 1 million people, Cyprus has an outsized banking sector equal to eight times the island’s entire gross domestic product. The sector was badly hit after bond investments in Greece soured because of that country’s own financial crisis.

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