After being shut down two weeks ago while the government attempted to negotiate a €10 billion ($13 billion) bailout, banks in Cyprus reopened today with strict withdrawal limits. The scene in Cyprus earlier today showed long lines at banks in the country's capital, while employees arrived early to prepare for the surplus of customers. Extra security and police were brought in to assuage the anticipated commotion. Much of the money had already been taken out of banks in February as talk of taxing deposits began. Foreign investors removed 18 percent of their deposits to avoid the coming fees.
Cypriots protested widely when news of the proposed tax on all deposits broke, leaving the government pressured to come to a new agreement by Monday. The new bailout, agreed upon by the EU in Brussels on Monday, contains harsh restrictions on banks in Cyprus and threatens the country's fragile economy. Part of the stipulations include shutting down the island nation's second largest bank, Cyprus Popular Bank (also known as Laiki Bank), and transferring deposits under €100,000 to the country's largest bank, Bank of Cyprus. Deposits over €100,000 will be frozen, and some funds will be exchanged for bank issued shares.
Furthermore, strict limitations have been placed on the citizens' access to their bank accounts. Cypriots are only allowed to withdraw €300 ($383) per person per day, and no checks can be cashed, only deposited.
Anyone leaving the country can carry no more than €1,000, or equivalent foreign currency, in cash. Airline officers are instructed to confiscate any amount over the allotted €1,000. The Cyprus central bank will review all commercial transactions over €5,000, and any over €200,000 will be scrutinized on an individual basis. Cypriot foreign minister Ioannis Kasoulides said the rest of Europe is asking too much of his country; “Europe is pretending to help us but the price to pay is too high: nothing less than the brutal destruction of our economic model.” Economists have also suggested that the crisis and Cyprus could lead to a second-class "Cyprus Euro" which would be less valuable than the Euro itself.
Citizens expressed their frustrations while waiting in line this morning. “I feel a sense of fear and disappointment having to queue up like this; it feels like a Third World country, but what can you do?” said Froso Kokikou, a 64-year-old pensioner. Maroulla Chrysanthou, a retiree from Nicosia, has been struggling since the banks closed. “My children brought me here, as I can't walk easily,” she told The New York Times. “We got by with what we had and my children were withdrawing some money so we could buy basic stuff.” Chrysanthou said she planned to take out as much money as she could.
The restrictions have affected businesses in the country as well. Miltos, a 27-year-old businessman stood in line with nearly €40,000 ($51,000) of bills he owes to suppliers of his small telecommunications company. If he is not able to transfer more than the €5,000 limit, he said he fears he might have to declare bankruptcy. Another local business owner worried about the effect the economic changes will have on his livlihood. “There's no money, no nothing,” Christoforos Parisis said. “It affects me and my business very much. And we don't know what will happen.”
But despite the uncertainty and hardship, Cypriots remained surprisingly calm and no crowd issues were reported. Cyprus president Nicos Anastasiades said in a statement on Twitter: “I would like to thank the Cypriot people for their maturity and collectedness shown in their interactions with the Cypriot Banks.”
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