Cyprus Lifts Capital Controls Two Years After Deposits Bail-In

Cyprus's President Nicos Anastasiades
Cyprus's president Nicos Anastasiades, said, the end of the last capital transfer restrictions is the result “of all our hard work and consistency in the implementation of the obligations we undertook.” Photographer: Andrew Caballero-Reynolds/Bloomberg

Cyprus will lift next week the last of the capital controls that were imposed two years ago as part of a 10-billion euro ($10.9 billion) European bailout.

The last restrictions on international transfers will be lifted on April 6, Cyprus government spokesman Nikos Christodoulides said in an e-mailed statement to Bloomberg. Domestic capital controls ended in May 2014.

“The lifting of the restrictions confirms the full restoration of confidence in the banking system, the significantly improved business climate and essentially marks the return of the economy to normal conditions,” he said.

Cyprus is emerging from the crisis that forced it to seek a bailout and impose a levy on depositors two years ago while Greece, which in 2010 became the first country to be rescued by its euro-area partners, continues its tug-of-war with creditors.

The end of the last capital transfer restrictions is the result “of all our hard work and consistency in the implementation of the obligations we undertook,” Cyprus President Nicos Anastasiades said in Nicosia today.

Deposits have shrunk since the crisis, standing at 46.5 billion euros at the end of February compared with 67.5 billion euros in the same month of 2013, and Standard & Poor’s says lifting the controls may put the stability of deposit levels at risk.

“We see uncertainty regarding the impact of the elimination of the remaining controls on international transactions on the stability of private-sector deposits,” S&P analysts led by Marko Mrsnik said on March 27.

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