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Last updated: March 29, 2013 9:58 am
Cyprus president Nicos Anastasiades on Friday sought to reassure Cypriots that the country’s crisis was “contained” and that its future remained in the euro.
Speaking at a conference of civil servants in Nicosia, Mr Anastasiades said: “We have no intention of leaving the euro”, Reuters reported. “In no way will we experiment with the future of our country”. He added that the risk of bankruptcy had been averted and that “the situation, despite the tragedy of it all, is contained”.
However, he was critical of the single-currency bloc and its “unprecedented demands that forced Cyprus to become an experiment”, the news agency reported the president as saying.
Mr Anastasiades’s comments come a day after angry Cypriots queued to withdraw money as banks reopened for the first time in almost two weeks under a regime of strict capital controls.
While officials had feared a run on the banks, Cypriot depositors formed orderly queues of up to a few dozen, patiently waiting to access their accounts, and there were no reported incidents of violence.
Cyprus’s foreign minister, Ioannis Kasoulides, hailed the “mature and responsible behaviour of citizens of Cyprus”, drawing comparisons between their calm under the current circumstances and their resilience after the Turkish invasion of 1974.
Despite an exterior of calm, many people waiting at banks expressed anger at the government for a crisis that had crippled the island’s financial sector and brought business to a halt.
At Co-op bank, Magda El Moursi, a student, had come to help her grandmother take out the maximum €300 from her pension. “People are very angry and upset with the president and the government. We are paying for their mistakes,” she said.
Angelos Stylanos, a manager at a Laiki Bank branch, said he had been worried about going to work on Thursday. “I didn’t expect people to be so calm – even people who lost money.” He added: “We are the bank – I am the bank.”
While calm, Mr Stylanos said his sympathies lay with his customers. “We feel angry, betrayed.”
“Anyway, Luxembourg, Slovenia is coming,” he added sarcastically – referring to other offshore centres’ attempts to woo money from Cyprus. “We should give them seminars on risk issues.”
Kyriacos Hadjisophokis, a pensioner and veteran of the 1974 conflict that followed Turkey’s invasion, was one of the few people waiting outside Nicosia’s flagship Bank of Cyprus branch, two hours before it was due to reopen. “I need to get money to pay rent, and to eat,” he said, explaining that he did not own a bank card. “It has been hard for two weeks.”
Residents of Cyprus will only be able to withdraw a maximum of €300 in cash per day from each bank where they hold an account and local businesses will have to limit transactions to a maximum of €5,000 a day.
Credit card transactions will be limited to €5,000 a month, while Cypriot customs officials will ensure that travellers take just €1,000 in bank notes out of the country per trip.
In the well-heeled south of Nicosia, a crowd of about 30 people were pressed up against the revolving door outside Laiki Bank, where they were let in a few at a time by guards.
Data from the Central Bank of Cyprus published on Thursday showed that savers from other eurozone countries withdrew 18 per cent of the cash they held in Cyprus, or €860m, in February but deposits from non-eurozone countries rose fractionally to €42.6bn. Overall, deposits were down almost €1bn to €67.5bn.
The finance ministry defended the use of capital controls, describing them as necessary to stop a run on the banks and insisting they would be temporary.
“The Central Bank of Cyprus and the government of Cyprus will review them each day with a view to progressive lifting of the measures as soon as circumstances allow,” the ministry said on Thursday.
The European Commission threw its support behind the measures for the first time, arguing on Thursday that they did not violate EU legislation. Some experts had previously argued that they did.
“In current circumstances, the stability of financial markets and the banking system in Cyprus constitutes a matter of overriding public interest and public policy justifying the imposition of temporary restrictions on capital movements,” the commission said.
Officials will be keeping a close eye on the Bank of Cyprus and Laiki Bank – the island’s two largest lenders whose big depositors will face large losses as part of a €10bn EU bailout.
Laiki Bank branches opened on Thursday even though the lender has been put into administration. All assets will be transferred to the Bank of Cyprus.
The Bank of Cyprus and Laiki’s biggest depositors will receive shares in the new Bank of Cyprus in exchange for significant losses on their deposits, meaning as of Thursday the lender will in effect be in private hands.
The chairman and chief executive of the Bank of Cyprus have already been fired. Control of the institution will be handed over to a special administrator.
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