Cypriot youth protest as banks stay shut

by
March 27, 2013

NICOSIA | Cypriots vented anger in the streets on Tuesday and were desperate to learn what would happen to their savings, with the government yet to reveal details of controls it will impose to prevent a run when banks reopen after a painful bailout.

A special administrator was appointed to run the country’s biggest bank, which will take over accounts from the second biggest bank as part of the restructuring package designed to bail out and rein in the oversized financial sector.

Cyprus’s banks were ordered to remain closed until Thursday, and even then will operate under as-yet-undisclosed capital controls imposed to prevent depositors from emptying the vaults.

The Central Bank governor said the controls would be “loose” and would apply to all banks in the country. The restrictions would be “temporary” but he would not say what form they would take or how long they would last. Earlier, the finance minister said they could be in place for weeks.

Cyprus had faced bankruptcy and potential ejection from the European single currency without a rescue deal with international lending bodies. Now that the deal has been struck, it faces job losses and economic contraction.

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