Cypriots lined up calmly at banks as they reopened yesterday under tight controls imposed on transactions to prevent a run on deposits after the government was forced to accept a stringent EU rescue package to avert bankruptcy.
Banks were shut almost two weeks ago as the government negotiated a 10 billion euro (US$12.8 billion) international bailout, the first in Europe’s single currency zone to impose losses on bank depositors.
Bank staff turned up for work early as cash was delivered by armored trucks, and lines of at least a dozen people formed at branches in the capital, with uniformed security guards on duty.
Doors opened at noon, but initially at least there was no sign of any major run on the banks, as had been feared.
A lot of money had already left electronically. Figures published by the Central Bank of Cyprus yesterday showed that savers from other eurozone countries withdrew 18 percent of their deposits from the stricken island last month, as talk of a tax on bank accounts rose.
Overall private sector bank deposits in Cyprus fell by 2.2 percent to 46.4 billion euros last month, after a similar drop in January.
Authorities say the emergency rules imposed to limit withdrawals and prevent a bank run will be temporary, initially for seven days, but economists say they will be difficult to lift as long as the economy is in crisis.
The capital controls decree was taped to the windows of bank branches and staff handed out copies to customers. In Nicosia, there was relief, but some apprehension about what might happen.
“You’ve no idea how much I’ve been waiting for this,” said 64-year-old pensioner Froso Kokikou, waiting in line at a branch of Cyprus Popular Bank, also known as Laiki.
“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?” Kokikou said. “This is what they imposed on us and we have to live with it.”
Many of those waiting in line were elderly people, who said they had run out of cash because they did not have bank cards.
The Cyprus stock exchange said it would remain closed yesterday.
A Cypriot Ministry of Finance decree limited cash withdrawals to no more than 300 euros per day and banned the cashing of checks. The Central Bank of Cyprus will review all commercial transactions of more than 5,000 euros and scrutinize transactions of more than 200,000 euros on an individual basis. People leaving Cyprus may take only 1,000 euros with them.