Thursday, March 28, 2013

Cyprus Announces Unprecedented Capital Controls

Bank of Cyprus customers wait to be helped as banks reopened today after nearly two weeks

Cyprus becomes the first member state in the history of the EU to impose capital controls.  The Minister of Finance and the Governor of the Central Bank of Cyprus announced that in consideration the exceptional circumstance, capital restrictions will be imposed as temporary measures to regulate the flow of capital within and out of Cyprus in order to safeguard the stability of the system.

Each customer will be able to withdraw €300 in cash per day from each bank in which they have an account;

Businesses will be able to carry out transactions up to €5.000 per day, per account and pay staff salaries;

Payments and or transfers outside the Republic, via debit and or credit and or prepaid cards are permitted up to €5.000 per month, per person in each credit institution;

Cyprus Popular Bank (Laiki) has been placed into administration and all insured deposits have been transferred to the Bank of Cyprus.

To restore the health of the Bank of Cyprus, the bank has been recapitalised to 9% based on the adverse scenario by PIMCO. Insured deposits have been fully protected, uninsured deposits will be partly retained as cash and partly converted into shares in the Bank of Cyprus.  The Bank of Cyprus will be privately owned by its large depositors.

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