Cyprus ends cash with­drawal lim­its from banks

The Pak Banker - - COMPANIES/BOSS -

Cyprus scrapped all lim­its on daily cash with­drawals from banks in a sig­nif­i­cant loos­en­ing of cap­i­tal con­trols that were im­posed fol­low­ing the coun­try's painful fi­nan­cial res­cue deal a year ago.

The eas­ing of re­stric­tions comes with the steady bol­ster­ing of con­fi­dence and sta­bil­ity in the bank­ing sys­tem, the Fi­nance Min­istry said. Be­fore Fri­day's de­cree, the daily with­drawal lim­its were 300 eu­ros ($412.8) for in­di­vid­u­als and 500 eu­ros ($688) for com­pa­nies. The de­cree also in­creases the amount of money that a per­son can move within Cyprus to 50,000 eu­ros ($68,800) from 20,000 eu­ros. The amount for com­pa­nies was dou­bled to 200,000 eu­ros ($275,180).

It also lifts a ban on ac­cess­ing money in ex­ist­ing fixed term de­posits be­fore their ma­tu­rity date. To en­cour­age people who had pulled their money out of banks in the res­cue's aftermath to de­posit with banks again, the de­cree al­lows people to open new ac­counts in any bank as long as they are a fixed term de­posit of 5,000 eu­ros or more.

Pre­vi­ously, open­ing a new ac­count in a bank other than one where a cus­tomer al­ready had an ac­count was pro­hib­ited to pre­vent people from mov­ing money from bank to bank and po­ten­tially starv­ing a trou­bled lender of needed cash.

Cypriot au­thor­i­ties im­posed the con­trols to head off a run be­cause a key clause in its 10 bil­lion-euro res­cue plan in­volved the seizure of al­most half of unin­sured de­posits in the coun­try's largest bank and clo­sure of its sec­ond-largest lender. The plan was ne­go­ti­ated with other eu­ro­zone coun­tries and the In­ter­na­tional Mon­e­tary Fund.

A ban on un­fet­tered money trans­fers abroad re­mains in place. Au­thor­i­ties hope to elim­i­nate that re­stric­tion by the end of this year.

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