NICOSIA, Cyprus (AP) — Anxious Cypriots patiently waited in long lines to get at their accounts on Thursday after banks opened for the first time in nearly two weeks, following an international bailout to save the country's financial system.
Fearing a run on its banks, the tiny Mediterranean country has imposed daily withdrawal limits of 300 euros ($384) for individuals and 5,000 euros for businesses — the first so-called capital controls that any country has applied in the eurozone's 14-year history.
Financial strains are building on families and businesses, and the recession in Cyprus is likely to deepen. The mood outside banks was calmer than feared. Many people said the withdrawal limits were probably necessary to keep a bad situation from spiraling out of control.
Flower shop owner Christos Papamichael was among some 30 people waiting patiently for bank doors to open at noon Thursday. "Everything has been paralyzed ... No one thinks of buying flowers," he said.
Banks had been shut in Cyprus since March 16 to prevent people from draining their accounts as politicians scrambled to save the country's stricken financial sector. ATM machines were working, but with a limit on daily withdrawals.
An initial plan to seize up to 10 percent of all Cypriot deposits caused an international uproar and was scrapped. But in order to secure 10 billion euros ($12.9 billion) in loans from other euro countries and the International Monetary Fund, Cyprus agreed Monday to wind down its second-largest bank and seize billions from accounts holding more than the insured limit of 100,000 euros.
European financial markets, which have been on edge for weeks, rose slightly on Thursday. The FTSE 100 index of leading British shares rose 0.4 percent, while Germany's DAX index rose 0.1 percent.
Government and bank officials had feared that up to 10 percent of the country's deposits could be siphoned off when banks opened Thursday — but that did not appear to happen. Guards from private security firms reinforced police outside some ATMs and banks in the capital, Nicosia. No problems controlling crowds were reported.
The limits on withdrawals and other capital controls are expected to be relaxed gradually. Analysts say it's anyone's guess how people and businesses will react once that happens.
Foreign Minister Ioannis Kasoulides said that, according to central bank estimates, the controls would be fully lifted in a month. Some analysts say it could last longer.
President Nicos Anastasiades expressed in a statement his "warm gratitude and deep appreciation towards the Cypriot people for the maturity and spirit of responsibility they have shown at a critical time for the stability of the Cypriot economy."
However, many Cypriots were left frustrated and confused by the closures and controls and concerned about the effect on their businesses and livelihoods.
"No matter how much information there was, things were changing all the time," said Costas Kyprianides, a grocery supplier in Nicosia.
For years, the banking sector has been the lifeblood of the Cypriot economy, attracting money from across Europe — and especially Russia — thanks to high interest rates and loose regulation. The country's deposits ballooned to more than seven times its economic output. But Cypriot banks ran into trouble after taking massive losses on Greek government bonds.
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