Global finance ministers urged Cyprus to allow problem-free banks to resume transactions on frozen accounts, saying strict limits on banks are hurting the country’s economy, according to Russian Finance Minister Anton Siluanov.
Cyprus reached an agreement with euro-zone governments in March to impose losses on uninsured depositors at the country’s two biggest banks, Bank of Cyprus Plc (BOCY) and Cyprus Popular Bank Pcl (CPB), as part of negotiations for the 10 billion-euro ($13.1 billion) rescue of its financial system. The country’s banks were shut for almost two weeks to avoid capital flight before reopening March 28 with controls limiting financial transactions.
“The way the problems are being addressed in Cyprus has cast doubt on the trustworthiness of its economic policies,” Siluanov said during a press conference after Group of 20 meetings in Washington yesterday. “The sooner we solve that problem and remove all the limits on transaction, the faster the banking system will revive, and so will the economy of Cyprus.”
Last week Siluanov said that Russia, which holds the rotating presidency of G-20 this year, plans to discuss ideas for an early-warning mechanism to prevent future Cyprus-like crises.
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