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Cyprus has no intention of leaving euro, president says

March 29, 2013|By Stuart Pfeifer
  • Customers line up Friday outside a bank in Nicosia, Cyprus. It was the second day banks were open, following a nearly two-week closure to avert a run on deposits.
Customers line up Friday outside a bank in Nicosia, Cyprus. It was the second… (Simon Dawson / Bloomberg )

The president of Cyprus said the risk of bankruptcy has been contained and the country has no intention of leaving the euro.

Conservative leader Nicos Anastasiades spoke Friday, one day after banks reopened following an almost two-week closure aimed at averting a run on deposits that could have derailed the country’s banking system, Reuters reported.

The country’s banks were shuttered while the government negotiated a $13 billion international bailout. They reopened Thursday, but with severe restrictions: Customers are limited to 300 euro withdrawals per day and are prohibited from cashing checks. People leaving Cyprus will be allowed to take no more than 1,000 euros with them.

Anastasiades said the restrictions would be gradually lifted. He gave no time frame.

The country’s foreign minister, Ioannis Kasoulides, said most restrictions would be lifted within one month.

The government initially said the controls would remain in place for a week, subject to review. Economists say they will prove hard to lift as long as the economy is in crisis.

The president, barely a month in the job and wrestling with Cyprus's worst crisis since a 1974 war split the island in two, accused the 17-nation euro currency bloc of making "unprecedented demands that forced Cyprus to become an experiment," Reuters reported.

"We have no intention of leaving the euro. In no way will we experiment with the future of our country," Anastasiades said.

Warnings of a stampede at Cypriot banks when they reopened on Thursday proved unfounded.

For almost two weeks, Cypriots were on a ration of limited withdrawals from bank cash machines. Even with banks now open, they face a regime of strict restrictions designed to halt a flight of capital from the island.

Anastasiades said the capital controls would be "gradually eased until we can return to normal."

The immediate threat of national bankruptcy had been averted, he said. "The situation, despite the tragedy of it all, is contained."

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