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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