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Cyprus to impose temporary capital controls: president


08:34, March 26, 2013

NICOSIA, March 25 (Xinhua) -- Cyprus Central Bank will impose temporary controls on financial transactions when most banks reopen on Tuesday in a bid to avoid panic withdrawal of deposits, Cypriot President Nicos Anastasiades announced on Monday.

In a televised speech to the people shortly after returning from Brussels where he concluded what he described as a painful bailout agreement, Anastasiades said everything will be done to return to normalcy as soon as possible.

"I want to assure you that it will be a very temporary measure which will gradually be relaxed," Anastasiades said.

The Central Bank of Cyprus announced that all banks will reopen on Tuesday after and eight-day bank holiday, except Bank of Cyprus and Cyprus Popular Bank which will open two days later.

It said the two banks have to make practical arrangements for their merger decided by the Eurogroup.

Anastasiades called on the people to stay cool-minded and work closely with authorities with patience and decisiveness to restart the economy in the shortest possible time.

Anastasiades said he lived dramatic moments at a Eurogroup meeting in Brussels on Sunday night as Cyprus found itself "only a breath away from economic collapse."

"The agreement we reached was painful but the best we could get under the circumstances," Anastasiades said.

The Eurogroup decided on a 10-billion-euro bailout on condition that the two main lenders of Cyprus, Bank of Cyprus and Cyprus Popular Bank, be merged, with the bad section of Popular to be resolved.

It also imposed a "bail-in" on the Bank of Cyprus by forcing its uninsured depositors with savings above the 100,000 euro mark to take a loss expected to be over 30 percent.

Anastasiades said that despite these negative points, the agreement helps definitely overcome the danger of a bankruptcy of Cyprus and averts tragic consequences for the economy and the society.

"In the situation we found ourselves in there were no easy solutions and I had to take difficult, painful and also daring decisions to safeguard a manageable tomorrow," said Anastasiades.

He added that he could understand the anger over the responsibilities which led the country into its predicament and announced a criminal investigation within the next few days.

Anastasiades dismissed demands mainly by left wing AKEL party and some small centrist politicians to either exit the Eurozone or seek a solution outside the European Union.

"Despite our bitterness and disappointment over the stance of some of our partners, I don't consider that distancing ourselves from the European family would be an answer to the crisis," said Anastasiades.

He added that the Eurogroup will make available 10 billion euros at a low interest and an extended grace period and the European Central Bank will safeguard liquidity for the banking system.

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