Two years after the island nation became the first – and still the only – country in the eurozone to impose capital controls on its banking sector, Cyprus has decided finally to lift the last of its remaining restrictions. The measures were first introduced to prevent the banking population from withdrawing their funds en masse, and the decision to do away with the controls completely shows that the banking system is on the mend.
The decision to do away with the controls completely shows that the banking system is on the mend
“It is a vote of confidence in our banking system, which, now fully independent of Greek banking institutions, can move forward”, said the country’s president, Nicos Anastasiades, in a statement. Whereas beforehand a monthly cap prevented any individual from transferring more than €20,000 overseas and stopped travellers from taking anymore than €10,000 out of the country, the restrictions are no more after a steady two-year recovery.
Following in the footsteps of Argentina and Iceland, who each imposed controls to protect against their own demons, the measures were not the first of their kind – though represented an unusual take in that the island nation is without a currency to call its own. However, the restrictions were adopted in 2013 by a country hit hard by the Greek debt crisis and one for whom strict controls were required as part of a €10bn bailout from the EU and IMF.
The free flow of capital also represents a considerable part of Cyprus’ continued efforts to distance itself from Greece, and restoring normality to the banking system could well prove decisive in bringing additional investment to the country from overseas.