Cyprus’s banks open after two weeks as controls curb panic

Markets Muted

Stocks and the euro rose, with the single currency climbing 0.2% to $1.2804 at 2:21 p.m. in Frankfurt. Spanish bonds slid, with the 10-year yield rising two basis points, or 0.02 percentage points, to 5.09%.

The Cyprus Parliament last week gave wide-ranging powers to the central bank governor, Panicos Demetriades, and Finance Minister Michael Sarris, who have spent the last days deciding which measures to implement.

Those chosen include bans on terminating time deposits and cashing checks. Customers can transfer abroad at most 5,000 euros per month from a given financial institution.

“People have organized their budget for the week through the ATM machines and the radio has been calling on people not to run to the banks today,” Maria Kyriacou, a Cypriot ruling-party lawmaker, told Bloomberg Television.

Chaos Fear

“I will not go to the bank today because I’m afraid that it will be chaos,” said Maria Charalambous, a grocery store owner. “You do not know who will be behind you in the line and you could end up getting robbed. I will wait and see.”

Cypriot banks lost 1 billion euros in deposits in February amid rising uncertainty over the country’s ability to secure a bailout, European Central Bank data showed today.

Cyprus in June became the fifth euro-area nation to request a rescue, after Greece’s debt restructuring trashed the financial health of lenders including Bank of Cyprus, the nation’s biggest lender, and Cyprus Popular.

The 18 billion-euro economy is the third-smallest in the 17-nation euro area. Before the bailout, which was coupled with an austerity package, the European Commission predicted a contraction of 3.5% in 2013. Economists said afterward that the damage will be greater.

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