Pimco’s El-Erian Says Capital Controls Choking Growth in Cyprus
Capital controls imposed in Cyprus to prevent an outflow of capital from the troubled nation are “choking the economy,” according to Pacific Investment Management Co.’s Mohamed El-Erian,
“We’re looking at a depression in Cyprus,” El-Erian, chief executive officer of the world’s largest manager of bond funds, said in a television interview on “In the Loop” with Betty Liu.
Cyprus’s banks opened for the first time today in almost two weeks, with new rules curbing access to cash preventing an initial panic to withdraw deposits. The Central Bank of Cyprus’s money controls include a 300-euro ($383) daily limit on withdrawals and restrictions on transfers to accounts outside the country.
Cyprus’s lenders have been closed since March 16, when the European Union presented a proposal to force losses on all depositors in exchange for a 10 billion-euro bailout. That plan touched off protests and political upheaval on the island, and was rejected by the country’s parliament. A subsequent agreement shut Cyprus Popular Bank Pcl, the second-largest lender, and imposed larger losses on uninsured depositors.
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