After being closed for two weeks while the government negotiated a bailout deal with international lenders that will see depositors holding uninsured accounts of more than 100,000 euros losing as much as 80 percent of their money – and not able to collect the balances for years – Cyprus’ banks opened again at noon on March 28 to long lines of people anxious to take out as much as they can.
The government put capital controls in place to prevent large withdrawals, limiting people to only 300 euros ($390) per day and banned cashing of checks among other restrictions.
The long lines included a lot of shouting and some pushing and shoving although there were no immediate reports of a large-scale run on the banks and those with deposits under 100,000 euros were protected from loss. In the age of the Internet too, people could make limited electronic transfers from home without having to go to the banks.
The combination of factors appeared to have prevented all-out chaos although worries persisted that the situation could become more tense as the low withdrawal limit means some people have to keep returning to the banks often.
Lines started to form ahead of the reopening, with private security guards standing with police to prevent disorder. One 70 year-old pensioner who only gave his name as Ioannis stood outside a bank in the capital Nicosia some two hours ahead of the noon opening. “I had to come this early, I came from my village 20 kilometers away, what do they want me to do, keep coming and going?” he told the Associated Press.
Outside a Bank of Cyprus Branch, among the first in line was a 52-year-old Greek businessman who said he flew in from Greece to take “as much money out as he could” from his account to pay bills and employees. He said he would be hit by the tax on deposits over 100,000 euros.
“This is chaos, we don’t know what to expect once banks open,” the businessman said who wouldn’t give his name because he didn’t want to discuss personal financial matters. “They shouldn’t have allowed things to get this far.”
Accounts over 100,000 euros ($130,000) were frozen at the Bank of Cyprus and Hellenic Bank and businesses said they would be unable to operate with the strict restrictions on how much money they could get.
Yorgos Georgiou, who owns a dry cleaning business in Nicosia, told Reuters that “Finally people’s mood will be lifted and we can start to trust the system again.” But he added: “I’m worried about the poor kids working in the cashiers today, because people might vent their anger at them. You can’t predict how people will react after so many days.”
Kostas Nikolaou, a 60-year-old retiree, told Reuters that the uncertainty of the past two weeks had been “like a slow death.” He added that, “How can they tell you that you can’t access your own money in the bank? It’s our money, we are entitled to it,” he added.
Newly-elected President Nicos Anastasiades, said the confiscation tax demanded by international lenders in return for a 10 billion euros ($13 billion) bailout to keep the economy and banks from total collapse was “painful” but essential.
He had opposed it when he was campaigning only a month before. Nobel laureate economist Christopher Pissarides, a Cypriot, said it was “extremely unfair to the little guy.”
The stock exchange, also closed since March 16, remained closed. The Ministry of Finance insisted the capital control measures were temporary and were needed to “safeguard the stability of the system.”
It said in a statement that, “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.
Cyprus capital controls
- Daily withdrawals limited to 300 euros
- Cashing of checks banned
- Those traveling abroad can take no more than 1,000 euros ($1,280) out of the country
- Payments and/or transfers outside Cyprus via debit and or credit cards permitted up to 5,000 euros ($6,395) per month
- Businesses able to carry out transactions up to 5,000 euros ($6,395) per day
- Special committee to review commercial transactions between 5,000 and 200,000 euros ($255,856) and approve all those over 200,000 euros on a case-by-case basis
- No termination of fixed-term deposit accounts before maturity
See all the latest news from Greece and the world at Greekreporter.com. Contact our newsroom to report an update or send your story, photos and videos. Follow GR on Google News and subscribe here to our daily email!