As banks reopened in the beleaguered island nation of Cyprus Thursday, account holders were told daily limits on cash withdrawals would last only a week. But just kidding, according to the government, it could be a month before Cypriots are allowed full access to their bank accounts. "A number of restrictions will be lifted and gradually, probably over a period of about a month according to the estimates of the central bank, the restrictions will be lifted," Cyprus' foreign minister Ioannis Kasoulides said.
Restrictions in place now limit Cypriots to withdrawing only €300 ($385) a day in cash and no one, Cypriot or visitor, is allowed to carry more than €1,000 in cash out of the country. The limits are in place to prevent Cypriots from moving their money out of the country en masse, a move that would surely collapse Cyprus' already fragile banking system. These capital controls are the first to ever be put in place by a eurozone member state.
Under terms of the nation's €10 billion bailout, accounts up to €100,000 are insured, but larger depositors at the busted banks may lose 40 percent of their accounts (though they'll get compensated in the banks no one wants for their money). The fear behind the deposit limits is that a run on the bank by large accountholders would immediately move their remaining savings to a another country, leaving Cypriot even more penniless than they are. Many of the largest accounts in Cyprus actually belong to Russian banks, who are now threatening to sue for their losses.
But down below the high finance, the Cypriots themselves, who need money to buy things, have been highly critical of the restrictions imposed by the bailout. As The Guardian points out, "Almost no country that has enforced such controls has done so temporarily." In a move of solidarity, Cyprus' President Nicos Anastasiades has announced he will be taking a 25 percent salary cut and cabinet members will also be cutting their pay by 20 percent. However that move by Anastasiades, who was a wealthy lawyer before being elected, has not exactly quelled the concerns of Cypriots.
"I burst out laughing when I heard the news," Christos Neophytou a lawyer in Nicosia told The Guardian. "Anatasiades is a very, very rich man who after all has also used his political connections to expand his law firm. Like lots of people I am totally unimpressed by the decision."