Cyprus to lift capital controls as country ‘immune to Greek crisis’

NICOSIA: Cyprus will lift all capital controls on Monday and President Nicos Anastasiades voiced confidence that its banking system, forced into a chaotic bailout in 2013, is now immune to the crisis in neighbouring Greece.

The Mediterranean island nation became the first and, to date, the only euro zone country to impose capital controls, when its banking system imploded in 2013 and depositors pulled out their funds.

Cyprus was forced to shut one bank and seize deposits in another to recapitalise a system badly exposed to Greece’s debt crisis.

Asked whether Friday’s announcement on ending the controls was a Cypriot “vote of confidence” in Athens’ current bailout talks with Brussels, Anastasiades answered: “It is a form of a vote of confidence because we want to believe further crisis will be averted.

“It is a vote of confidence in our banking system, which, now fully independent of Greek banking institutions, can move forward.”

Cypriot banks chalked up about € 4.5 billion, or 25 percent of the island’s gross domestic product, in losses from their holdings of Greek sovereign bonds written down in late 2011.

A condition for lenders agreeing to give Cyprus € 10million in aid in 2013 was that the banks sell off their branches in Greece – then billed as an attempt to “ring fence” the Greek economy from the Cypriot crisis. – Reuters