Lo­cal bank re­stric­tions lifted, grad­ual re­cov­ery says FinMin

Financial Mirror (Cyprus) - - FRONT PAGE -

The govern­ment lifted all re­stric­tions in do­mes­tic bank­ing on Fri­day, with the fi­nal hin­drance of open­ing lo­cal ac­counts now re­moved, due to a sat­is­fac­tory rate of lo­cal liq­uid­ity and a re­duced risk of cap­i­tal flight.

In tele­vised state­ments on lo­cal chan­nels on Fri­day night, Fi­nance Min­is­ter Haris Ge­or­giades said that the ef­fort to bring the econ­omy back on a re­cov­ery path is at its peak and that he sees a grad­ual growth in eco­nomic ac­tiv­ity by 2015.

In the 30th de­cree is­sued since the Eurogroup of Eu­ro­zone fi­nance min­is­ters im­posed harsh aus­ter­ity mea­sures 14 months ago as part of a 10 bln euro bailout that brought the bank­ing sec­tor and the econ­omy to its knees, the un­re­stricted open­ing of ac­counts is now al­lowed, while a fur­ther re­lax­ation on for­eign banks al­lows open­ing new ac­counts for new in­di­rect credit fa­cil­ity, that is a let­ter of guar­an­tee, and a let­ter of credit, in two cases.

The Min­istry of Fi­nance said that in the first case of open­ing a cur­rent/sight ac­count to ser­vice a loan, the credit bal­ance of the ac­count can­not ex­ceed 120% of the loan bal­ance.

Sec­ond, in the case of an in­di­rect credit fa­cil­ity, the credit bal­ance of the sight/cur­rent ac­count can not ex­ceed 120% of the bal­ance of the in­di­rect credit fa­cil­ity.

The Min­istry of Fi­nance said that the ba­sic goal is the grad­ual lift­ing of all tem­po­rary re­stric­tions, based on a con­crete roadmap agreed with the Troika of in­ter­na­tional lenders last Au­gust, in or­der to en­hance growth ef­forts.

Cer­tain mile­stones have been in­serted in the roadmap, the Min­istry ex­plained, through which the lift­ing of all do­mes­tic re­stric­tions was made pos­si­ble.

The Min­istry of Fi­nance said there were pos­i­tive de­vel­op­ments, such as the out­come of the last Troika mis­sion re­view - the fourth in a row - ear­lier in May, as well as up­grad­ing of the Cyprus sov­er­eign by rat­ing agencies, adding that these al­low for the lift­ing of do­mes­tic re­stric­tions.

The govern­ment said it will pro­ceed “sys­tem­at­i­cally” to re­lax and lift all re­stric­tions in in­ter­na­tional trans­ac­tions.

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