Cyprus ends capital controls 2 years after bailout

GMT 18:20 2015 Monday ,06 April

Arab Today, arab today Cyprus ends capital controls 2 years after bailout

Nicos Anastasiades
Nicosia - AFP

Cyprus on Monday signalled a return to financial normality in scrapping capital controls two years after they were imposed to halt a banking meltdown, the finance ministry said.
President Nicos Anastasiades said last week the last of the draconian measures -- imposed to avoid a run on local banks -- would be lifted on Monday, and the finance ministry confirmed that this has now happened.
Business leaders called the abolition of controls of "significant importance" to the economy in allowing the free flow of capital.
Business groups said the move brought "normality to the banking system and helped attract investment from overseas".
Now that external controls have been lifted, both businesses and individuals will be allowed to transfer money abroad with no restriction.
Cyprus was the only eurozone member to have imposed such curbs.
Under the restrictions, residents were allowed to transfer up to 20,000 euros ($21,700) abroad each month, and travellers could take up to 10,000 euros with them per journey.
The authorities closed the banks for two weeks in March 2013 as they finalised a 10-billion-euro bailout by the European Union and International Monetary Fund.
When the banks reopened, they imposed a raft of measures on domestic and international capital movements.
In return for international aid, the government in March 2013 agreed to wind up its second largest bank, Laiki, and impose losses on depositors in its under-capitalised largest lender, Bank of Cyprus.
They suffered a 47.5 percent "bail-in" as part of the bailout package.
In return for the rescue, the government adopted swingeing austerity measures and radically restructured the bloated banking sector.
All domestic capital restrictions were lifted last May.
Anastasiades on Friday said ending capital controls "reinforces the positive outlook for raising investment under conditions of full trust and confidence".
"It strengthens the ability of the banks to raise capital and safely finance the economy," he added.
After a three-year recession, Cyprus expects to return to marginal growth this year.


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