CYPRUS—After being closed for almost two weeks, with people able to withdraw funds via ATMs only, banks on the island nation of Cyprus are expected to open Thursday, but that doesn’t mean that individuals and companies will be able to withdraw large amounts from their accounts. In a bid to head off what the New York Times calls an inevitable “stampede to withdraw money,” the government today announced “severe restrictions… on access to the country’s bank accounts.”
The Times reports that the measures are supposed to be in place for one week only, but that the timeline can be extended. Whether that happens or not, a general belief prevails that whenever the restrictions are lifted a massive run will take place, creating an impossible scenario for the government.
“If you don’t impose the controls, the money is going to fly,” said Eurasia Group senior analyst Mujtaba Rahman. “But when you remove those controls, clearly the money is going to leave anyway. So they’re in a Catch-22.”
As it is, “a flood of withdrawals” is expected to take place Thursday or thereafter anyway, but the hope is that the new measures will at least mitigate the damage. Restrictions announced Wednesday include, according to the Times, barring “electronic transfers of funds from Cyprus to other countries. And individuals will not be allowed to take more than 3,000 euros cash outside the country, well below the current restriction of 10,000 euros, or $13,000. Credit and debit card charges will be capped at 5,000 euros per person per month. And checks cannot be cashed, although they can be deposited.”
In other news, the CEO of Bank of Cyprus was fired Wednesday by the central bank, and Cyprus President Nicos Anastasiades “opened a criminal investigation into how the country’s banks had been brought to the brink of collapse.”
