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Cyprus Postmortems: Part II

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Cyprus Postmortems: Part II

by Stephen Lendman

Cyprus shows the euro project failed.

On March 28, Cyrus Mail said banks opened for the first time in almost two weeks. They did so at midday local time. Cypriots face draconian restrictions. How they'll react remains to be seen.

Capital controls limit withdrawals, restrict non-cash transactions, freeze check cashing, and convert checking accounts into fixed-term deposits.

Finance Minister Michalis Sarris "signed into law a temporary decree." It caps cash withdrawals "per person per bank at 300 euros."

It "effectively ban(s) cheques and control(s) cash outflows from the country."

It permits only 1,000 euros per person to travel abroad per trip. Higher amounts require special approval. 

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Business payments are capped at 5,000 euros per day. Others up to 200,000 euros require approval of a "special four-member committee." Amounts above 200,000 require similar approval.

Distributing company payrolls require supporting documents. They needed for student tuition and living expenses. They're required to send funds to first degree relatives studying abroad.

Overseas payments or transfers by debit, credit or prepaid cards are allowed up to 5,000 euros per month per person per bank.

The same goes for comparable amounts overseas by debit, credit or prepaid cards.

"Other payments or transfer of funds require the prior approval of the committee, taking into account the liquidity buffer situation of each credit institution in question."   

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It won't "be possible to prematurely break fixed-term deposits unless the funds are used to repay a loan within the same bank."

As long as capital controls remain, when fixed deposits mature, depositors "will only have access to either 5,000 euros or 10 per cent of the total, depending which is higher."

They're required to "put that amount either in a current account or a new fixed-term deposit in the same bank, depending on his (or her) choice." Residual amounts will be kept in the original deposit an extra month.

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I was born in 1934, am a retired, progressive small businessman concerned about all the major national and world issues, committed to speak out and write about them.

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