Cyprus banks face temporary controls

  • Cypriot President Nicos Anastasiades announced on Monday that temporary limits are to be placed on financial transactions in the wake of a bailout deal imposing a one-off tax on bank deposits.

    Banks on the Mediterranean island nation reopened today. However, the two at the center of the crisis, Bank of Cyprus and Laiki, are to remain closed until Thursday.

    Anastasiades stated "very temporary restrictions" would be put on capital flows without giving any further details.

    The banks' reopening comes a day after Cyprus agreed on a deal regarding a $13 billion bailout offered by the European Union and the International Monetary Fund.

    The bank levy was a condition of the bailout, which Cyprus will now do through a tax on deposits of more than $128,750.

    The original proposal, which was rejected by parliament last week, saw people with less than $128,750 in their accounts stand to pay a one-time tax of 6.75 percent while those with larger amounts would lose 9.9 percent.

    Controls to prevent money from leaving the country are already in place while limits on the size of cash withdrawals are expected to continue.

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