Cyprus central bank tried to kickstart spending in the country’s stagnant economy Friday by telling Cypriots that there were no limits on debit and credit card transactions made inside the country.
The central bank made the announcement to clarify the capital control rules it introduced this week to prevent a run on the country’s banks.
The bank said that while there is a 5,000 euro ($6,402.50) limit on credit and debit card purchases abroad, there were no such limits on domestic transactions and money transfers.
Cyprus’s banks had been shut since March 16 to prevent people from draining their accounts as politicians scrambled to save the country’s stricken financial sector.
Fearing a savers would rush to empty their accounts once the banks reopened, the country imposed daily withdrawal limits of 300 euros ($384) for individuals and 5,000 euros for businesses — the first so-called capital controls that any country has applied in the eurozones 14-year history.
Banks had been shut in Cyprus since March 16 to prevent people from draining their accounts as politicians scrambled to save the country’s stricken financial sector. A deal was needed to secure 10 billion euros ($12.9 billion) in loans from the eurozone and the International Monetary Fund.
Also Friday, the central bank updated a government decree about the amount of cash a person could take from the internationally recognized Greek-speaking south to the breakaway Turkish Cypriot north. While Cypriots can only carry 300 euros a day, foreign nationals will be allowed to have 500 euros. Cyprus was divided in 1974 when Turkey invaded after a coup by supporters of union with Greece. [AP]