Banks to open with tight controls

A spokeswoman for the Cypriot Central Bank said on Wednesday that banks would be open from noon to 6 p.m. local time on Thursday.

Cypriot Finance Minister Michalis Sarris also revealed the capital controls that are being imposed in a broadcast on state media.

He said cash withdrawals will be limited to 300 euros ($383) per day.

Cashing checks would not be permitted, but checks would be accepted. Credit card use abroad is to be limited to 5,000 euros per month.

Another restriction will be that Cypriots will not be allowed to carry more than 3,000 euros beyond the country's borders. International transfers have also been halted, with a few narrow exceptions such as parents of students studying abroad who need to transfer tuition fees and accomodation.

Sarris said the "lack of substantial liquidity and significant risk of deposits outflow, with possible outcome the collapse of the credit institutions" made the restrictions necessary.

Impact on the eurozone

Meanwhile, the euro hit a four-month low of $1.2793 as investors and economists worry the plan could become a blueprint for any future bailout. This concern comes despite attempts by some officials to dismiss the idea.

The eurozone and International Monetary Fund on Monday agreed to a deal to give Cyprus some 10 billion euros. The deal stipulates that further funding should be raised via a levy on bank accounts of over 100,000 euros at the country's two largest lenders, among other initiatives.

The current bailout now requires that the island's second largest bank, Laiki, be closed. On Monday, the nation's central bank appointed Andri Antoniades as special administrator for that task.

The largest lender, Bank of Cyprus, will be recapitalized under the stewardship of administrator Dinos Christofides, who was appointed on Tuesday.

mz/mkg (AP, AFP, Reuters)