Cyprus is to become the first eurozone country to apply capital controls – with limits on credit card transactions, daily withdrawals, money transfers abroad and cashing cheques – intended to prevent a vast outflow of euros when its banks open today.
Under drastic measures that some analysts say are incompatible with monetary union, depositors will be able to withdraw no more than €300 in cash each day, people familiar with the preparations said. Transfers above €5,000 will require permission of the central bank; overseas credit card transactions will be limited to €5,000 per month, but unrestricted in Cyprus; and people will be banned from taking more than €3,000 of bank notes out of the country per trip.
Cypriot banks are set to reopen this morning for the first time in nearly two weeks and stay open for six hours. Without controls, officials fear a run on deposits after Nicosia agreed to a €10bn bailout that imposes losses on big depositors – a first in the eurozone debt crisis.