There were long lines of anxious people but no sign of trouble as banks in Cyprus opened Thursday for the first time in nearly two weeks, following an international bailout that sought to prevent the country from financial ruin.
The government has imposed a daily limit on how much people can withdraw to stop a run on its banks — the first such action in the 14-year history of the euro currency. Cypriots took the measure in their stride, aware that with their economy teetering on the edge of collapse, any undue panic would make the situation worse.
The limits on transactions have been imposed initially for seven days and are being reviewed daily. According to Central Bank assessments, the restrictions are to be fully lifted in a month, Foreign Minister Ioannis Kasoulides said.
“Gradually, probably in a period of a month, or something according again to the estimates of the Central Bank and according to the developments, the restrictions will be fully lifted,” he said.
“If there (are) withdrawals from the banks, they may happen, but let me tell you once again there will be no bank run.”
Guards from private security firms reinforced police outside some ATMs and banks in the capital, Nicosia, but no problems controlling crowds were reported.
President Nicos Anastasiades expressed his “warm gratitude and deep appreciation towards the Cypriot people for the maturity and spirit of responsibility they have shown at a critical time for the stability of the Cypriot economy,” a statement from his office said.
However, many Cypriots were left frustrated and confused by the closures and controls, and concerned about the effect on their businesses and livelihoods.
Banks have been shut in Cyprus since March 16 to prevent people from draining their accounts as politicians scrambled to come up with a plan to allow the country to qualify for $12.9 billion in international bailout loans for its stricken financial sector.
A deal was finally reached in Brussels with other euro countries and the International Monetary Fund early Monday. The country’s second-largest bank, Laiki, is to be split up, with its healthy assets being absorbed into the Bank of Cyprus. Savers with more $129,000 in either Bank of Cyprus and Laiki will face big losses. At Laiki, those could reach as much as 80 percent of amounts above the $129,000 insured limit; those at Bank of Cyprus are expected to be much lower.
The capital controls include limiting daily cash withdrawals and payments abroad . No checks can be cashed, although they can be deposited.
Anyone leaving the country, whether Cypriot or a visitor, can take up to $1,290 with them in cash.
The country’s general accounting office said pensions and other social security payments, together with salaries for government employees, will be in bank accounts next Tuesday and Wednesday.
Some analysts are concerned that, if kept in place long, Cyprus’ measures will go against the fundamental principle of the single currency: free and easy movement of money around the euro’s 17 members.
In a statement Thursday, The European Commission said EU member states could restrict financial transactions “in certain circumstances and under strict conditions on grounds of public policy or public security” but added that “the free movement of capital should be reinstated as soon as possible.”
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