Monday

26th Jun 2017

Cyprus lifts last capital controls after two years

  • Back in business. Cyprus lifted its last remaining capital controls on Monday (Photo: Berge Gazen)

Cyprus has lifted its last remaining capital controls just over two years after becoming the eurozone’s first country to impose cash restrictions.

Under measures which came into force on Monday (6 April), there will no longer be a monthly cap of €20,000 on transfers by individuals to foreign banks, or of €10,000 for travellers moving money out of the country.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

On Friday (3 April), Cypriot president Nicos Anistasiades said that the removal of the remaining cash limits marked “the full restoration of confidence in our banking system and the stabilisation of economy of Cyprus”.

The eurozone's first ever capital controls were introduced on the island two years ago amid fears of a massive bank run prompted by a clumsily agreed EU bailout of the Cypriot economy and the Greek debt crisis.

The concerns followed a decision by the EU to impose losses on depositors holding more than €100,000 as part of a €10 billion bailout, that also included the shutting down of its second largest bank Laiki and the restructuring of the the largest lender, the Bank of Cyprus.

The EU had argued that Cypriot banks had become a haven for money laundered by Russian businessmen, and had built up unsustainable liabilities which had amounted to more than nine times the size of the Cypriot economy.

Meanwhile, Cypriot banks took a €4.5 billion hit - worth around 25 percent of the country’s annual economic output - as part of the haircut imposed on holders of Greek government bonds in late-2012.

Amid the political turmoil that surrounded the negotiations on the deal - which originally was going to target all depositors - the Cypriot government set restrictions on bank money transfers and withdrawals, with a daily cash withdrawal limit of €300, although most of these were lifted by the end of 2013.

Having suffered three consecutive years of recession - albeit more modest than originally forecast - the Cypriot economy is expected to return to growth in 2015.

Neighbouring Greece is now coming under increasing pressure to impose restrictions as panicked savers continue to move their money elsewhere amid fears that they could be forced out of the currency bloc. More than €10 billion in deposits were removed from Greek banks in the months of January and February, according to data from the European Central Bank.

For its part, Iceland continues to have rules on cash-flow seven years after imposing them in the wake of its own domestic banking crisis.

Cyprus risks remain, Troika warns

Cyprus has made a good start to its EU rescue programme, but jobs and consumer confidence are falling, creditors say.

Dijsselbloem: Greece might need capital controls

Greece could be forced to resort to Cypriot-style capital controls in a bid to prevent depositors taking their money out of the country, the chairman of the Eurogroup has warned.

North Cyprus election renews hopes of peace deal

Independent candidate Mustafa Akinci won a surprise victory to become president of Northern Cyprus on Sunday, in a result that could prove a breakthrough for peace talks on the divided island.

EU approves rescue of Italian banks

The European Commission gave the green light to a €17-billion plan by the Italian government to save Banca Popolare di Vicenza and Veneto Banca.

Focus

EU and China move to fill US void

At a summit in Brussels, EU and Chinese leaders will attempt to deepen ties on trade and climate as US president Trump plans to pull out of the Paris climate deal.

Italy reaches EU deal on failing bank

After months of negotiations, the European Commission and Italy agreed on the terms of rescue for Monte dei Paschi di Siena bank, including job cuts, salary caps and private sector involvement in the bailout.

News in Brief

  1. Seasoned finance minister takes over Dutch coalition talks
  2. British PM closes government deal with Northern Irish party
  3. Merkel on collision course with US at G20 summit
  4. Schulz outlines German election strategy, hits out at Merkel
  5. Berlusconi's party sees comeback in Italian local votes
  6. Low turnout in Albanian election set to mandate EU future
  7. Merkel and Macron hold symbolic joint press conference
  8. Juncker has 'no' clear idea of kind of Brexit UK wants

Stakeholders' Highlights

  1. Malta EU 2017Conservation of Atlantic Tunas: International Measures Become EU Law
  2. European Healthy Lifestyle AllianceCan Statin Therapy Interfere With a Physically Active Lifestyle?
  3. EPSUOn Public Services Day, Stop Austerity! Workers Need a Pay Rise!
  4. EGBAOnline Gambling: The EU Court Rejects Closed Licensing Regimes In Member States
  5. World VisionFaces of Today, Leaders of Tomorrow: Join the Debate on Violence Against Girls - 29 June
  6. ECR GroupThe EU Must Better Protect Industry from Unfair Competition
  7. Malta EU 2017Better Protection for Workers From Cancer-Causing Substances
  8. EPSUAfter 9 Years of Austerity Europe's Public Sector Workers Deserve a Pay Rise!
  9. Dialogue PlatformGlobalised Religions and the Dialogue Imperative. Join the Debate!
  10. UNICEFEU Trust Fund Contribution to UNICEF's Syria Crisis Response Reaches Nearly €200 Million
  11. EUSEW17Bringing Buildings Into the Circular Economy. Discuss at EU Sustainable Energy Week
  12. European Healthy Lifestyle AllianceCan an Ideal Body Weight Lead to Premature Death?

Latest News

  1. China's slow foray into Central and Eastern Europe
  2. Estonia presidency and Google fine This WEEK
  3. UK previews offer on EU nationals' rights
  4. EU approves rescue of Italian banks
  5. Cohesion policy for a stronger Europe
  6. Cheap meat is a bigger problem for climate and health
  7. Ministers to reject minimum parking spaces for electric cars
  8. Macron’s investment screening idea watered down by leaders