Cyprus determined to keep place in euro area, president says

Cypriot President Nicos Anastasiades vowed to keep his country in the euro as Cypriots adapted to a second day of restrictions on their use of the common currency to prevent a financial collapse.

The government averted panic withdrawals yesterday when it allowed banks to open for the first time in almost two weeks. The curbs on access to cash are designed to prevent a run on deposits after Anastasiades forged an agreement with the euro area on a financial rescue that is being funded in part by those with deposits of more than 100,000 euros in the nation’s two largest banks.

“We’re not about to leave the euro,” Anastasiades said in a speech in Nicosia, the capital, today. “The dramatic developments in our country must find us united, so that we can successfully implement the Eurogroup accord, remain safely in the euro and continue on the road of the major changes we have begun.”

European officials have urged the country to move quickly to lift the restrictions, the first time that a member of the euro area has imposed controls on the movement of capital. The curbs include a 300-euro daily limit on withdrawals and restrictions on transfers to accounts outside the country. The European Commission said yesterday the constraints must remain “proportionate” and be lifted as soon as possible.

Seven Days

How long the measures will remain in force is unclear. The Cypriot government said in a March 27 statement they will be imposed initially for seven days while Finance Minister Michael Sarris said on March 26 they will end “in a matter of weeks.” The impact of the controls is being monitored daily, the central bank said.

Cyprus’s lenders had been shut since March 16, when the European Union proposed forcing losses on all depositors in exchange for a 10 billion-euro ($12.8 billion) bailout. That was rejected by the country’s parliament amid concern its offshore banking industry would be irreparably harmed.

Anastasiades agreed to a new accord on March 25, which shuttered Cyprus Popular Bank Pcl, the second-largest lender, and imposed larger losses on depositors with more than 100,000 euros, after failing to get financial aid from Russia, one of the island’s biggest investors.

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