Following the "bail-in" of depositors as a condition
of international financial support to Cyprus in March 2013
restrictive measures were imposed on deposits within the Cyprus
banking system as at 15 March 2013. These restrictions are
gradually being relaxed and the government has announced that it
hopes to remove them entirely in the first few months of
2014.
Further progress towards normalisation of the banking system has
been made with the release by Bank of Cyprus, the largest
commercial bank, of €950 million of blocked deposits. At the
time the bank was recapitalised €2.9 billion of deposits were
blocked. The target date for release of the first tranche of
€950 million was the end of January 2014, with an option for
the bank to roll over the deposits for a further period of six
months. Having established evidence of improving stability in its
deposit base and an increasing level of customer confidence, the
bank's management determined that there was no need to exercise
the option to roll over the deposits and accordingly released
them.
The Ministry of Finance and the Central Bank of Cyprus have
welcomed this move as a significant indication that the banking
system is on course for stabilisation, and a step to strengthen the
confidence of the public and investors.
It should be noted that restrictive measures apply only to funds
within the Cyprus banking system as at 15 March 2013. Any funds
introduced after that date are free of any restriction.
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