On 8 August the Cyprus government published a
"roadmap" towards the lifting of the restrictions that
were imposed on banking operations in March 2013.The government is
committed to removing the restrictive measures and restoring the
free movement of capital as soon as conditions allow, and indeed a
number of relaxations of the restrictions have already taken
place.
The roadmap reflects the strategy agreed between the Ministry of
Finance, the Central Bank of Cyprus and the "troika" of
international lenders based on the following principles:
- The restrictive measures should remain in place only for as long as is strictly necessary.
- The restrictive measures will be gradually removed through careful and prudent steps, so as to safeguard financial stability.
The relaxations are intended to take place in two main phases,
with the first phase comprising the abolition of restrictions on
domestic transactions such as cash withdrawals and the second phase
comprising the removal of restrictions on cross-border capital
movements. The first phase is designed to reduce the risks
associated with the large sums of cash currently held by households
and businesses, and to increase access to funds held in accounts.
The second stage will see the abolition of restrictions on
international banks and on the transfer of funds overseas.
The agreed roadmap links the proposed relaxation measures to
specified milestones related to the recapitalisation and
restructuring of the Cyprus banking sector, on the grounds that the
rehabilitation of the banking sector is essential in rebuilding
depositors' confidence in the banking system and promoting
economic recovery.
The lifting of the restrictive measures will be gradual and will
have regard at each stage to the prevailing level of confidence in
the banking system, to indicators of financial stability and to the
liquidity situation of credit institutions, with the overall
objective of removing the restrictions as quickly as conditions
permit.
The publication of the roadmap is a welcome confirmation that the
Cyprus authorities and the providers of international financial
support are committed to the earliest possible return to normal
financial conditions. It should also be noted that funds
transferred into Cyprus from abroad after the date the restrictive
measures entered into force (27 March 2013) are exempt from the
restrictions.
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