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Cyprus scraps post-bailout limits on cash withdrawals

Nicosia: Cyprus on Friday abolished restrictions on cash withdrawals imposed a year ago to avoid a run on the banks during bailout negotiations in 2013.

Moving towards lifting the Eurozone’s only capital controls, Finance Minister Haris Georgiades issued a decree abolishing the €300 (Dh1,515,$410) daily ceiling on cash withdrawals from banks.

With “the overall stabilisation and restoration of confidence in the banking system, it is feasible to ease restrictions further,” he said in the decree.

The daily withdrawal limit was one of the key restrictions under the capital controls regime.

Cypriots are still not allowed to cash cheques or take more than €3,000 with them when they travel abroad.

The decree also increased the current limits for the transfer of money within Cyprus, regardless of the purpose.

Under certain conditions, Cypriots are also allowed to open new bank accounts if they are not an existing customer of a credit institution and they open a fixed deposit account exceeding €5,000.

Cyprus has passed three reviews from the troika of international lenders and received bailout cash to restructure its near bankrupt banking system.

The IMF announced Friday it was disbursing another tranche of a one-billion-euro extended fund facility following the third review.

“The completion of this review enables the disbursement of SDR [Special Drawing Rights] 74.25 million [about €83.3 million],” bringing total disbursements under the arrangement to about €333.2 million, it said.

Nicosia says it could abolish all controls by the end of 2014 if sufficient progress is made in adopting its bailout programme and investor confidence is fully restored.

Cyprus last year agreed a €10-billion rescue package with the European Commission, European Central Bank and International Monetary Fund to bail out its troubled economy and bloated banking system.

The deal included a restructuring of the banks, with the island’s second-largest lender, Laiki, wound up and its good assets folded in to the largest lender, Bank of Cyprus (BoC).

Deposits above €100,000 in both banks were subjected to so-called “bail-ins”.

Those amounts from Laiki were converted into BoC shares, and 47.5 per cent of deposits already held in BoC were also converted.

Fears of a bank run in March 2013 forced the government to close all the island’s banks for nearly two weeks and impose the draconian controls when they reopened.