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Capital control pain in Cyprus to last a month

Thursday, March 28, 2013 - 02:27

March 28 - Banks reopen in Cyprus after almost two weeks, with customers venting their frustration over tight capital controls which allow them to withdraw just 300 euros per day. Ciara Sutton reports on the strict measures which the Cyprus government now says will remain in place for a month.

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Tensions were high as banks in Cyprus opened their doors for the first time in almost two weeks. (SOUNDBITE)(Greek) BANK EMPLOYEE COMING OUT OF BANK AND SAYING: "Help us to get through this day. Stop trying to open the door, only the first five can enter." There was calm amongst residents queuing at most branches, but many vented their frustrations. (SOUNDBITE)(Greek) WOMAN WHO JUST CAME OUT OF BANK WITH HER MOTHER SAYING: "Things are not ok, not at all ok. She couldn't get any money, she tried to cash a bond but she couldn't get it and she has to wait for her pension." Banks are enforcing tight controls on transactions to prevent money leaving the country, after the government accepted a stringent EU rescue package to avert bankruptcy. Residents are only allowed to withdraw up to 300 euros per day, can't take more than 1000 euros in bank notes out of the country and can't cash cheques. The government initially said the measures would be in place for a week, but now says they will apply for the next month. Reuters Breakingviews Chris Hughes believes it could be even longer. (SOUNDBITE) (English) REUTERS BREAKINGVIEWS CHRIS HUGHES, SAYING: "On the one hand we're supposed to believe that they'll only last a week and yet some of the controls relate to periods of a month. And there's talk as well as provisions of the controls being extended. So I think any half skeptical observer is going to look at this and go maybe they're not quite so temporary." It's the first time bank depositors have been punished in a eurozone bailout. The situation in Cyprus has reignited concerns about how unified the euro currency bloc is, with southern states hit hardest by the region's sovereign debt crisis. Marshall Gittler is from IronFX in Cyprus. (SOUNDBITE) (English) MARSHALL GITTLER, HEAD OF GLOBAL FX STRATEGY AT IRONFX, SAYING: "It is not an optimal currency zone. I mean this is nothing new. People were worrying about this before they went in to the euro, it's only that it's taken 15 years for the problems to become evident. I don't think that these problems are going away. It's Cyprus today, it'll be Italy tomorrow, Spain the day after." Anxiety over Cyprus put a brake on a rally on equity markets since the start of 2013. But with the first day of banking on the island running relatively smoothly, some of that uncertainty has been removed. European shares rose in afternoon trade and the FTSEurofirst 300 rose half a percent, recovering from a three-week low.

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Capital control pain in Cyprus to last a month

Thursday, March 28, 2013 - 02:27