Brussels, 14/06/2013 (Agence Europe) - On Friday 14 June, the European Commission said that it was for the Cypriot government to decide on the right moment for lifting the restrictions on the movement of capital. Chantal Hughes, spokeswoman for EU Internal Market Commissioner Michel Barnier, said it was not for the Commission to take the final decision.
In an interview published that same day in French newspaper Le Figaro, however, Cypriot President Nicos Anastasiades said that any country in receipt of aid is obliged to inform its lenders of any decision that might impact on its financial credibility. He hoped the troika of lenders (European Commission, European Central Bank and International Monetary Fund) would understand the bank liquidity problems that was weighing heavy on the Cypriot economy. He said that if they didn't then Cyprus would have to take decisions to ensure the public interest and lift the capital restrictions.
The Commission spokeswoman said: “In fact there are restrictions maintained, these we believe are justified given question of financial stability, working closely with Cypriot authorities, meeting every week” since the restrictions were introduced in March. Although the Cypriot president says that that, after its recapitalisation, the country's leading bank, Bank of Cyprus (BoC), is now a solid group that does not need excess protection, the Commission spokeswoman said: “We think not for us to take the final decision, but we do think that the situation has not changed greatly, there is still a very difficult situation which could justify some restriction on the movement of capital”.
Prodromos Prodromou, a Cypriot parliamentarian from the ruling DISY party, told this newsletter that the capital restrictions were initially supposed to be in place for three or four days, but they've now been in force for nearly three months. He says the ECB has taken action twice to prevent the lifting of some of the restrictions. Asked about this, the ECB simply repeated the statement of its president, Mario Draghi, earlier this month that, as long as it is compatible with the stability of the flows of finance on the island, the earlier the restrictions are lifted the better, but that is not the ECB's responsibility.
After the publication of statistics at the end of last month revealing a 7.3% decrease in bank deposits in Cyprus in April, an ECB source said that people should remember that this decrease had happened with the restrictions on the movement of capital in force.
Along with the capital restrictions, a significant proportion of BoC deposits are frozen while awaiting the outcome of an audit by KPMG, expected in late summer. The audit will decide the exact proportion of deposits of over €100,000 that will be raided in addition to the 37.5% already taken from BoC accounts. (EL/transl.fl)