While the measures are supposed to be in place for just one week, some expect the controls to be extended somehow into the future. Cypriot bank customers will be prohibited from using electronic transfers to send money from Cyprus to other countries, and citizens will also be prohibited from taking more than $3,860 in cash outside the country, The New York Times reports.
Additionally, the ATM cap will increase from $128 per day to $384 per day, and customers are allowed no more than $6,400 in credit and debit charges every month. While banks will accept check deposits, the institutions will not cash any checks. Bank customers will also be unable to withdraw money from fixed-term deposits before they reach maturity.
“This is a typical set of exchange control measures, more reminiscent of Latin America or Africa,” Bob Lyddon, the managing director of IBOS, an international banking association, said, according to The New York Times. “There is no way these will only last seven days. These are permanent controls until the economy recovers.”
To ensure that banks have enough cash, the European Central Bank flew nearly $2 billion to the country on Wednesday. A person with knowledge of the operation said the ECB indicated it would continue to send cash to the country as necessary.
Michalis Sarris, Cyprus’ finance minister, said on Wednesday a flood of money out of banks was likely anyway but added that the controls would help a mass outflow of deposits.
“Each day that banks remain closed created more uncertainty and more difficulties for people, so we would like to do our utmost to make sure that this new goal that we have set will work,” Sarris said, The New York Times reports.
Despite the restrictions, the country is preparing for as much as 10 percent of $82 billion in deposits to be taken out of the banks. Experts, however, predict a much bigger increase in withdraws when and if the controls are lifted or eased.