Cyprus Banks ( aka glorified ATMs with 300 Euros withdrawal limits ) set to reopen ! Capital controls set forth in detail .....

http://www.zerohedge.com/news/2013-03-28/buchheit-cyprus-situation-spiralling-down

Buchheit On Cyprus: "The Situation Is Spiraling Down", And Why A Second Bailout May Be Needed

Submitted by Tyler Durden on 03/28/2013 17:05 -0400

• Italy
 
• Sovereign Debt

When the world's leading expert on Sovereign debt restructuring believes that the endgame for Cyprus might be another round of restructuring, adding that "I'm not sure this is over," it is important to listen. With the calmness in Cyprus today more reflective of paralysis than confidence,  Lee Buchheit senses that the parameters of how much money will be needed to recapitalize the banks have changed. He tells Bloomberg TV's Lee Pacchia in this brief clip, "the situation is spiraling down... they'll need more money because the economy is worse, tax collections less, deposits will flow out when they can flow out." As for which European nation will be next in need of assistance with its sovereign debt burdens? Buchheit agrees with us that while many are looking to Slovenia, he sees real economic and political problems in both Italy and Spain remaining especially since the EU "have certainly changed the rules of the game."

http://www.cyprus-mail.com/cyprus/limassol-port-standstill/20130328

Limassol port at a standstill

By Poly PantelidesPublished on March 28, 2013

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Cyprus, Giorgos Pouros,harbourmaster, Limassol port, limbo, shipping containers

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More than double the usual number are in storage

THOUSANDS of shipping containers have been accumulating at Limassol port as their recipients are either reluctant or unable to pay shipping agents for the deliveries, the acting Limassol harbourmaster said yesterday. 

“About 2,500 containers are in storage, compared with the norm of between 1,000 and 1,200,” acting harbourmaster Giorgos Pouros said referring to the expected numbers of containers that are safeguarded in storage until they are picked up. 

“Movement has been stagnant in recent days, as people are waiting for the banks to open,” Pouros said. 

On an average day, some 200 to 250 containers of shipment get picked up by porters, Pouros said. 

But when shipping agents announced on Monday this week that they would only accept payment in cash when porters received a shipment, traffic dropped even further. Just 100 containers were moved out of port on Tuesday, Pouros said. 

By early afternoon yesterday porters picked up about 200 containers, Pouros said but added this related to cheaper goods. “Due payments may range from a hundred euros to thousands of euros. The more expensive goods are staying in the port,” Pouros said. 

The Chamber of Commerce and Industry’s (KEVE) general secretary Marios Tsiakkis said that it was vital the banking system started working again so that goods could be cleared through customs and the market can escape its inertia. 

“You know that suppliers are not delivering goods any more unless they’re paid in cash. You understand that cash supply is limited and is not enough to allow transactions among business because big amounts are involved in those,” Tsiakkis said. 

As a result, goods are not entering the market, he said. 

Tsiakkis said KEVE did not yet receive complaints that products had gone missing but added they were “definitely very close to supermarket stocks running out”.

There have been a number of reports from businesses that are saying their employees will not be paid at the end of the month because they are not receiving payments, the Employers’ and Industrialists Federation has said. 

The head of Paphos’ architects and civil engineers association, Chrysostomos Italos, said yesterday that all construction activities came to a standstill about two weeks ago. 

The head of Paphos’ recreational centres’ association said that suppliers’ cash-only mandate had created a “chaotic” situation.

http://www.zerohedge.com/news/2013-03-28/cyprus-answer-uniastrum

Cyprus - The Answer Is Uniastrum

Submitted by Tyler Durden on 03/28/2013 09:20 -0400

• Bond
 
• Equity Markets
 
• European Central Bank
• European Union
 
• Greece
 
• Italy
 
• Portugal

Submitted by Mark J. Grant, author of Out of the Box,

And the Answer is Uniastrum

It's funny how things are done in Europe. Nothing is as it seems. Then everything is orchestrated to try to get you to believe what they want you to believe. The Cyprus fiasco is one good example. The Dutch Finance Minister and Chairman of the Eurogroup broke ranks and spoke the truth; there is now a template in Europe for financial bail-outs which include losses for bond holders and depositors. The ECB had almost all of its members deny that there was any template. Then Spain denied, Portugal was on the tape so many times yesterday denying that you thought it was the newest Cadillac commercial and then virtually every other country in Europe had somebody in the Press with their own denials. "One-off" was the word of the day and the giant European propaganda machine worked well into the night.

The problem is the way these things work.The reporters, from any news agency, are handed out stuff from the government. They have to publish it. There is no choice.So it appears as official jargon that they hope we will all believe. Then the members of the Press cannot be too critical or say too much or they will be shut off and ostracized by Brussels or Berlin or wherever they reside. Consequently much of what we read in or from the European Press is less than forthcoming. Not lies necessarily; but not exactly all of the truth. I do not fault the Press one iota here because there is nothing else they can do but I caution you not to believe too much of what you read. America has much more, significantly more, freedom of the Press than Europe allows.

So let us then turn back to Cyprus and see why the Russians are not quite so upset as they were at the beginning of the crisis. The answer to this question is Uniastrum bank which is headquartered in Moscow. Eighty percent (80%) is owned by the Bank of Cyprus. After the crisis began and right up until the capital controls were implemented the bank was open for business with no restrictions upon withdrawals. So the crisis began, was all over the Press and the Russian depositors walked into the local bank and withdrew their money from Uniastrum, the Bank of Cyprus, or had it wired in from the other local Cyprus banks and it was then withdrawn. Problem solved!

At the same time Laiki bank and the Bank of Cyprus had operating branches in London. There were no restrictions there either so people could walk into those banks and withdraw their money as well. No restrictions at all right up until the time of the Capital Controls. In the meantime, in Cyprus, people and institutions could not get at their money so the Russians and many British took out their money, closed their accounts while the people in Cyprus were left high and dry.

Then the EU and the ECB took a fresh look at the deposits in the Cyprus banks and went ballistic. A huge chunk of the money that was thought to be in the banks was now gone. The amount the depositors were supposed to cover of the European loan was now not what anyone thought or was lead to believe when they were having their late night summit on Cyprus in Brussels. The EU could not reconvene and look like idiots. The CEO and the entire Board of Directors at the Bank of Cyprus was fired and the European Union flew into a tizzy, announced nothing, and had the ECB cover up the disaster. The Cyprus Parliament will be investigating all of this we are told but in the meantime; the money is gone. How much is anyone's guess but I would bet that a significant portion, billions and billions, is nowhere to be found. The EU will make the loan as described, the ECB will provide the rest of the money that can no longer come from the depositors and the cover-up is locked down. That is my assessment of what has happened.

In the short term the Europeans were stupid but in the medium and longer term they were really, really stupid. For a paltry amount of money they ruined Cyprus and it will be in worse shape than Greece in the not too distant future. Cyprus has also played the game badly based upon the fear of leaving the EU and they will suffer dramatically for their poor judgment. The fallout from Cyprus is that the Russians, other Europeans, the British have now been shown exactly what can and did happen when the European Union needs to bail-out some country or another. I predict you will see major capital outflows from Luxembourg, Malta and anywhere else that was once deemed a safe haven.

Goodbye and thanks for all the fish!

Europe, in their flight to pass the burden of bail-outs from the taxpayers so as to lessen their own political fallout has just ruined not only Cyprus, who will require more money certainly, but also the nations of Luxembourg and Malta who may also now be forced to turn to the EU for help. Then we have Slovenia on the brink and the much larger Italy and Spain that are standing there with them. Trouble in River City and BIG trouble in my opinion will be coming to a theatre near you shortly.

The imposition of Capital Controls will also cause further contagion. Quite obviously if it can be done in Cyprus it can be done anywhere the EU so chooses. The definition of a mattress is being re-defined in Europe. Some money may flow to the German banks but more, in my opinion, will flow to the American and Asian banks when that is a possibility. I would suggest that over the next few months that what money that can be moved out of European banks will do so and that the collective amounts will not be small. Europe has pulled out its German luger and shot itself in the foot or maybe the groin. Not dead perhaps but seriously wounded is going to be the result here and the markets, slow to catch on perhaps, will begin to get this joke which will cause all sorts of problems for the European bond and equity markets. Wider spreads, higher yields, more trouble funding and so on. If the Europeans wanted to find a way to cause the Euro to fall against the other major currencies they have done so but the cost will be significantly more than the gain.

When playing with revolvers it is a good idea to make sure the gun is not loaded. The Europeans obviously forgot to check!

http://www.zerohedge.com/news/2013-03-28/so-who-knew-february-cyprus-deposit-outflows-soared-three-year-high

So Who Knew? In February Cyprus Deposit Outflows Soared To A Three Year High

Submitted by Tyler Durden on 03/28/2013 08:12 -0400

• Eurozone

The decision to crush Cypriot depositors (first all of them, then just the insured ones) came in March, without any prior hints of the carnage that was about to be unleashed upon Cypriot bank unsecured liabilities. Or so the media narrative goes, because the last thing needed is to give skeptics any indication the "ad hoc" Troika plan was not so ad hoc after all, and some individuals - notably the key depositors - were warned in advance, sparing them the indignity of pulling a few billion at €300 per day. Alas, as just released central bank data shows, there may be cracks in the narrative because in February, at a time when the Eurozone was supposedly getting better every day and the Dow Jones was on the verge of its all time high, Cypriot depositors pulled the largest amount of cash in over three years.

Add this curious finding to the to do list for the 'task force' investigating who not only circumvented the capital controls, but had advance knowledge it was coming. Surely they will get right on top of that.

Source: Goldman

http://www.aljazeera.com/news/europe/2013/03/2013327234234606513.html

Cyprus to reopen banks amid protests

Temporary limits on daily withdrawals will remain in place as anti-bailout protests continue in Nicosia. Last Modified: 28 Mar 2013 05:56

Banks in Cyprus are to open for the first time in more than a week on Thursday, operating for six hours from noon (10:00 GMT), but restrictions will be in place on financial transactions to prevent people from draining their accounts. The move comes as hundred demonstrators marched from the European Union's offices in the capital to Parliament on Wednesday night to protest the bailout plan. Among the capital controls, cash withdrawals will be limited to 300 euros ($383) per person each day. No checks will be cashed, although people will be able to deposit them in their accounts, according to a ministerial decree that was released late Thursday. Other capital controls include a cap of 5,000 euros on transactions with other countries, provided the customer presents supporting documents. Payments above that amount will need special approval. Travelers leaving the country will not be able to take with them anything over 1,000 euros in cash - as well as the equivalent sum in foreign currency. Tuition fees and living expenses of up to 5,000 euros for three months will be permitted for overseas students, but documentation must be provided proving the student's relationship to the dispatcher. Also investors will also not be able to terminate fixed-term deposit accounts before they mature unless the funds are to be used for the repayment of a loan in the same bank, the decree says. Protests In Nicosia on Wednesday night, several hundred demonstrators marched from the European Union's offices in the capital to Parliament to protest the bailout plan. Also in the capital, armed police officers guarded several trucks carrying containers arriving at the country's Central Bank, while a helicopter hovered overhead. The contents of the trucks could not be independently confirmed, although state-run television said they were carrying cash flown in from Frankfurt for the bank reopening. Cyprus's banks were closed on March 16 as politicians scrambled to come up with a plan to raise $7.5 billion so the country would qualify for $12.9 billion in much-need bailout loans for its collapsed banking sector. The deal was finally reached in Brussels early on Monday, and imposes severe losses on deposits of over 100,000 euros in the country's two largest banks, Laiki and Bank of Cyprus. Since Monday's deal, Cypriot authorities have been rushing to introduce measures to prevent a rush of euros out of the country's banks when they do reopen.

and....






http://market-ticker.org/akcs-www?post=219169

Cyprus: Once Again, For Those Who Are Sleeping

I know it's considered impolite to repeat yourself but you need to at times like this because the commentary on the Cyprus situation continues to miss the mark to the point that it appears to be intentional.

The controls may include a ban on cashing checks and carrying more than 3,000 euros ($3,830) in cash across borders, Phileleftheros reported today, citing a draft Finance Ministry decree. The measures will last for seven days from when the decree is published and apply to all accounts and payments regardless of currency, the Nicosia-based newspaper said.
Cyprus’s lenders have been closed since a March 16 plan by the European Union to force losses on all depositors in exchange for a 10 billion-euro bailout touched off a political upheaval. While parliament rejected that plan, a subsequent agreement shuts Cyprus Popular Bank Pcl (CPB), the nation’s second-largest lender and imposes larger losses on uninsured depositors.

The issue is not whether investors should take the loss when there is a bank failure.  They should.  It is whether:

• The ECB and other institutions that are holding or guaranteeing bank debt are being protected while others are being hit.  That cannot be allowed.  That you're a government or quasi-government agency does not make you "superior" in the capital structure.  This is the exact scam that was run with GM and it has to stop.  The ECB must take the same loss as anyone else holding those bonds, as must any other bank.
• The depositors relied on a ECB and government claims of both insurance and solvency.  In short, they were lied to.  The insurance is being honored but the false claim of solvency is not.  This isn't an "opinion" it is a formal declaration coming from a government intended to keep people from pulling their money -- that is, it's intended that you rely on these so-called "opinions."  If you're going to issue such pronouncements under the premise that people should rely on them then you must be held to account when it turns out you're full of crap.

I have absolutely no problem with a banking relationship that has in big bold print the statement that there is no guarantee on deposits, that you can lose money, that it may all go to hell on you from the first day.  That's fine but that's not what's presented in banks across the land.  Instead what you see on the door is the FDIC insurance seal and nowhere in the account documentation is there a statement that you are an unsecured creditor, senior or not, in the bank for deposits in excess of the insured amount.
Further, our Treasury Secretary repeatedly, along with Ben Bernanke, has showed up on TV to tell us all about how safe and strong our banks are, as have the governments of other nations.  If these people are going to make statements like this they need to be held to account when they're lying about them.
Investing is all about risk management.  But today banking cannot be about a "free market" for risk and reward because (1) governments lie about the solvency of the banks, (2) governments intentionally allow banks to mark assets to fantasy values, thereby creating the illusion of solvency where it does not exist, (3) government agencies are often directly complicit when banks do outrageous things to misrepresent their capital status (e.g. what IndyMac did with backdating deposits, and the evidence is that the OTS examiner involved knew about it!) and then (4) when said banks get in trouble someone, other than the people who made the false statements and issued the fantasy garbage, get the bill.
I am not arguing for bailouts.
I am arguing for prison sentences, asset forfeiture and corporate death penalties for those who mark assets to fantasy values or who hold things "off balance sheet" and otherwise obfuscate the truth, making it impossible for  an investor or depositor to determine whether a given institution is safe or not.
I am arguing for prison sentences and the personal and very real corporal death penalty for government agencies and employees who conspire in these lies, because it is only through the use of implied force that government maintains a monopoly on that such frauds are turned into "ordinary business practices."  The offense is thus doubled -- not only is the public misled they are then actively screwed when the truth is discovered so the banksters can keep the loot.  This is exactly what happened in Jefferson County Alabama where despite some of the local people going to prison nobody from the bankster side was prosecuted.
In short, I am arguing that when a corporate actor does a bad thing, they must face the same punishment for robbing the people by deceit as someone does who rooks a nice old Granny out of her life savings, because the crime is exactly identical.
And when a government actor conspires in such an act he or she must be exposed to the ultimate penalty just as we issue a death sentence upon someone who targets our financial system with an airplane that they fly into a building on purpose, as the intended and executed crime -- the destruction of the many for the political and personal power goals of the few -- is exactly identical.

and......

http://www.keeptalkinggreece.com/2013/03/27/millions-of-euro-in-bank-notes-arrive-in-cyprus-per-airplane-from-frankfurt/

Five billion euro in cash arrived in Cyprus per airplane from Frankfurt

Posted by keeptalkinggreece in Economy

Hundreds of millions of euro bank notes arrived to Cyprus per airplane, Cypriot media reported.  The plane had taken off from Frankfurt and landed on the island in the afternoon.

A huge police operation was staged to carry the bank notes and distribute them  to several banks on the island as they will open again tomorrow, Thursday, after a week’s closure.

UPDATE:

5 billion euro in four containers have landed on the island from ECB. A long convoy of armored cars, armed men and police helicopters took the money to the treasure of the Central bank of Cyprus.

PS I assume all these money was sent to Cyprus by the ELA liquidity support mechanism of the European Central Bank. ?

and.....

http://www.zerohedge.com/news/2013-03-27/cyprus-banks-set-reopen-serve-glorified-atms-%E2%82%AC300-cash-withdrawal-limit

Cyprus Banks Set To Reopen, To Serve As Glorified ATMs With A €300 Cash Withdrawal Limit

Submitted by Tyler Durden on 03/27/2013 14:29 -0400

• New Normal

Tomorrow Cyprus banks will reopen sometime around noon (they are supposed to close at 6 pm but likely will close far earlier). What does that mean? Apparently nothing much. Because according ot various newswires the withdrawal limit at all banks will be €300 per day. This means that all those daytrading wannabes who want to get stinking rich and just buy US stocks with "no risk", will be unable to buy even one riskfree (at least until last September) stock of AAPL per day!

In other words, all said "reopening" will do, is to allow physical branches to be used as glorified ATMs but with a very terrified and confused carbon-based teller on the other side (the same ATMs which a few days ago saw their limit reduced from €300 to €120). All other cash transactions will be strictly curbed, virtually no cash will be allowed to exit the island, and the what's more the government will ban the termination of the oh so ironically-named time deposits. This means that time deposits will now become "permanent deposits", even if within the €100,000 insured limit. The good news: credit card treansactions will be permitted when paying for goods and services anywhere on the island. Of course, electronic cash just happens to not be physical cash, which is why the bank is so cavalier with allowing people to access their own money. Well, electronic 1s and 0s-based money.

In other words, tomorrow's bank reopening means absolutely nothing (as ATMs had worked for the duration of the Cyprus bail-in crisis), and anyone who had hoped they could just walk in and withdraw their entire insured deposit up to €100,000 will be severely disappointed. Of course, those who had more than €100,000: Poof, it's gone, step aside please.

Oh well: such is life in the New Normal under capital controls, in which there is aunquantifiable premium for having physical cash over electronic.

Learn from it.

and.........

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_27/03/2013_490296

Cyprus braces for banks to reopen and capital controls to begin  Protesters cast their shadows on a Cypriot flag during an anti-bailout rally outside the presidential palace in Nicosia on Wednesday. Banks in Cyprus are due to open on Thursday for the first time since March 15 as Nicosia becomes the first government in the eurozone to impose capital controls in an effort to prevent a collapse of the island’s financial system. Lenders will open their doors to customers from noon to 6 p.m. local time but there will be severe restrictions on what Cypriots will be able to do with their money, including a limit of 300 euros per person per day on cash withdrawals. Finance Minister Michalis Sarris was to issue a decree on Wednesday imposing capital controls, which means checks can be deposited but not cashed. The transfer of money abroad will be severely limited, with Cypriot students abroad not being able to receive more than 10,000 euros per quarter. Savers will not be able to redeem time deposits before maturity. Those leaving the country will not be allowed to carry more than 3,000 euros in cash on them per trip. The capital controls apply to all accounts, payments and transfers, regardless of currency used. Cyprus kept its banks closed for eight working days as it negotiated a bailout with the troika that will involved Cyprus Popular Bank (Laiki) being closed down and Bank of Cyprus being restructured. Sarris said Laiki depositors faced losses of up to 80 percent on deposits above 100,000 euros. Bank of Cyprus savers have been warned they may lose 40 percent of their uninsured savings. The opening of the banks in Cyprus comes amid a tense political atmosphere, with MPs from President Nicos Anastasiades’s DISY party calling for Central Bank Governor Panicos Demetriades to resign. The conservative politicians accused him of acting in the interests of the European Central Bank rather than Cyprus. Lawmakers from opposition parties questioned whether Sarris should remain in his job. There was a sense of relief in Athens on Thursday after the Greek branches of Cypriot banks reopened after 11 days without any signs of a bank run. Prime Minister Antonis Samaras reportedly stressed to ministers that the absence of panic was no reason for complacency and asked them to seek a swift resolution in talks with troika envoys next week on the streamlining of the civil service and on a new unified property tax. And...... http://www.cyprus-mail.com/capital-controls/new-limits-now-place-re-opening-banks-text-decree-included/20130328 NEW: Limits now in place for re-opening of banks - text of decree included By Stefanos EvripidouPublished on March 28, 2013 + - Text size Follow the mail on Twitter. TOPIC TAGS capital controls, Cyprus RELATED CONTENT Banks to remain shut Tuesday and Wednesday New: Limit on cash, credit-card use abroad Push for late opening in old city Truckloads of cash arriving at the central bank on Wednesday evening By Christos Theodorides AFTER ALMOST two weeks with no banking system and limited ATM withdrawals, banks across the country will once again open their doors to the public today, introducing temporary capital controls for the first time in the eurozone. Finance Minister Michalis Sarris last night signed into law a temporary decree capping cash withdrawals per person per bank per day at €300, effectively banning cheques and controlling cash outflows from the country, allowing only €1,000 per person per journey abroad.  According to sources, the decree will apply across the banking system but allows a significant amount of discretion in its application.  The thinking behind this is to allow healthy banks to get on with business while ensuring the newly restructured Bank of Cyprus will enjoy adequate protection during the first moments of its operation, as well as to prevent outflows of cash abroad.  The heads of the 26 banks represented in Cyprus were invited to the Central Bank yesterday for a briefing on the new capital controls drawn up by the finance ministry and banking supervisory authority after days of intense preparation.  Bank branches will open later than usual today, from12pm until 6pm, to give bank staff time to become acquainted with the new restrictions on money outflows.   The Legal Service worked on overdrive last night, combing over the finer details to ensure the provisions would withstand legal examination.  Meanwhile, truck loads of euro notes arrived at the Central Bank in Nicosia from the European Central Bank in Frankfurt under heavy police escort, including helicopters, ahead of today’s big opening.  The millions in hard cash is expected to be distributed among the commercial banks and cooperatives, opening today for the first time since the Eurogroup’s March 16 bombshell decision to impose a haircut on all depositors across the banking sector.   Following the uproar both within Cyprus and abroad, the Eurogroup reached a different outcome in the early hours of last Monday morning, with a new decision on the winding down of Laiki and the restructuring of Bank of Cyprus (BOC), with big depositors from both banks expected to take substantial hits.  Laiki’s uninsured depositors can expect a massive wipeout while the authorities have suggested Bank of Cyprus’ big depositors may see around 40 per cent of their savings over €100,000 converted into BOC bank shares. All insured depositors with under €100,000 will be saved, while no haircut or levy will be imposed on the deposits of any of the remaining 24 banks on the island.  According to the decree, the lack of substantial liquidity and significant risk of deposits outflow posed an “immediate risk of a complete destabilisation of the financial system of the country and the collapse of the entire financial sector, which is likely to have disastrous consequences for the country’s economy and society”.  Citing the need to safeguard public order and security, the finance minister ordered the application of a number of temporary restrictive measures on transactions.  These include a maximum cash withdrawal of €300 or its equivalent in foreign currency per person in each bank. If the full amount is not withdrawn each day, the difference can be carried over to the next day and withdrawn either from an ATM or bank teller or through credit cards against the balance in a current account.  The cashing of cheques is prohibited. However, it is believed that if a person wants to deposit a cheque in their account, this is permissible provided the money will not be drawn from the Bank of Cyprus and placed in another bank. Again, the aim is to curb capital outflows from the newly restructured BOC.   Transferring deposits or funds to accounts held abroad or in another bank is also prohibited except for normal business payment transactions of up to €5,000 per day.  Payments from €5,001 to €200,000 are subject to the approval of a special four-member committee, due to be appointed today.  According to sources, effectively, the bank will have discretion to approve these transactions though they must send the daily total and number of such payments to the special committee which officially, will give a response within 24 hours, taking into account the liquidity buffer situation of the bank.  For payments over €200,000, the request will have to be sent to the committee for approval.  Distributing company payrolls will also be permitted on the provision of supporting documents by the company.  Transactions will also be permitted for student living expenses up to €5,000 per quarter and tuition fees of first degree relatives studying abroad on the basis of supporting documents provided the money is wired to the beneficiary.   Payments and or transfers outside the Republic, via debit, credit or prepaid cards are allowed up to €5,000 per month per person in each bank.  Other payments or transfer of funds require the prior approval of the committee, taking into account the liquidity buffer situation of each credit institution in question.    It will not be possible to prematurely break fixed-term deposits unless the funds are used to repay a loan within the same bank.  For as long as the temporary decree is in place, when fixed deposits reach maturity, the depositor will only have access to either €5,000 or 10 per cent of the total, depending which is higher.  The depositor must put that amount either in a current account or a new fixed-term deposit in the same bank, depending on his choice. As for the remaining amount of money, this will be kept in the original fixed deposit for an extra month.   For those travelling abroad, each person per journey may take with them a maximum of €1,000 or the equivalent in a foreign currency. Any extra amount requires the prior approval of the committee. The Customs Department will be responsible for ensuring implementation of this rule.  According to the decree, any financial transactions, payments or transfers not finalised before the decree came into force will be subject to the new restrictions.  Banks are warned that they must “not execute cashless transfers that facilitate the circumvention of the restrictive measures”.  The measures apply to all accounts, payments and transfers regardless of currency.   Exemptions from the new set of stringent measures include: all new funds transferred from abroad; cash withdrawals or cashing cheques from foreign institutions abroad (likely aimed at tourists); payments authorised by the committee; cash withdrawals from accounts that banks hold with the Central Bank; the Cyprus Republic and the Central Bank.     Speaking on state broadcaster before the decree was issued, Yiangos Demetriou, head of internal audit at the Central Bank, said the measures would be reviewed after four days. UNOFFICIAL TRANSLATION FROM THE FINANCE MINISTRY  The Enforcement of Restrictive Measures on Transactions in case of Emergency Law of 2013 Decree as per articles 4 and 5 WHEREAS there is lack of substantial liquidity and significant risk of deposits outflow with possible outcome the risk of the viability of the credit institutions with chain effects that could lead to instability of the financial system and have destabilizing consequences on the economy and society of the country as a whole, AND WHEREAS under these circumstances an emergency situation is created, so for safeguarding public order and public security and for overriding reasons of public interest,  12(?) of 2013 The Minister of Finance in exercising the powers granted to him by sections 4 and 5 of the Enforcement of Restrictive Measures on Transactions in caw of Emergency Law of 2013, following a recommendation from the Governor of the Central Bank, issues the following Decree: Short title. 1. The present Decree shall be cited as the Enforcement of Temporary Restrictive Measures on Transactions in case of Emergency First Decree, of 2013. Interpretation 2. (1) In the present Decree, unless a different meaning results from the context-  «Committee» means the Committee established by virtue of section 9 of the Law? «Law» means The Enforcement of Restrictive Measures on Transactions in case of Emergency Law of 2013? «debit or credit or prepaid card» means debit or credit or prepaid card issued by a credit institution.  (2) Terms not otherwise defined in this Decree shall have the meaning ascribed to them by the Law. Imposition of restrictive measures. 3.  By virtue of sections 4 and 5 of the Law, following a recommendation by the Governor and with the consent of the Governor, the following restrictive measures are imposed:  (a) The maximum amount of cash withdrawal shall not exceed €300 daily or its equivalent in foreign currency, per person in each credit institution. All cash withdrawals (namely withdrawals via debit and or prepaid cards, withdrawals from the credit institution’s tellers and withdrawals via credit cards against a sight/current account’s balance) are computed per person consolidating all accounts held by the said person in each credit institution: Provided that any part of the maximum cash withdrawal allowed daily which is not withdrawn by the beneficiary during the day in which the limit applies, may be withdrawn at any time afterwards.  (b) The cashing of cheques is prohibited. (c) Cashless payments or transfers of deposits/funds to accounts held abroad or in other credit institutions are prohibited, with the exception of-  (i) Payments for transactions that fall within the normal business activity of the customer upon presentation of justifying documents as follows:   (aa) payment of up to €5.000 per day per account is not subject to any restrictive measure, (bb) payment from €5.001 to €200.000 is subject to the approval of the Committee. A catalogue of the requests for payments falling within this category shall be submitted to the Committee by the relevant credit institution on a daily basis and shall mention the amount of each payment, the total amount of all payments as well as the number of payments falling within this category. The Committee for its decision, which shall be taken within 24 hours, shall take into account the liquidity buffer situation of the credit institution. (cc)  payment above €200.001 provided the prior approval of the Committee is obtained after taking into account the liquidity buffer situation of the credit institution. (ii) payments for salaries of employees upon presentation of supporting documents.  (iii) living expenses up to €5.000 per quarter as well as tuition fees, of a person who is studying abroad and is a first degree relative of a Cyprus resident, on the basis of supporting documents: Provided that payments for living expenses shall be allowed only upon submission to the relevant credit institution of documents establishing that the person receiving the payment and or transfer of deposits/funds is studying abroad a is a first degree relative of a Cyprus resident: Provided further that tuition fees shall be paid only to the beneficiary educational institution, upon submission of the relevant justifying documents. (iv) payments and or transfers outside the Republic, via debit and or credit and or prepaid cards, shall not be allowed to exceed €5.000 per month per person in each credit institution. (d) It is prohibited to terminate fixed term deposits prior to their maturity unless the funds are used to repay a loan within the same credit institution.    (e) On the first maturity of fixed term deposits, the higher amount between €5.000 or 10% of the total amount of the deposit in question, shall, according to the choice of the depositor, either be transferred to a sight/current account or be deposited in a new fixed term deposit in the same credit institution. For the remaining amount the maturity shall be extended for one month. (f) Sums transferred from a fixed term deposit to a sight/current account shall be subject to the restrictive measures applicable to sight/current accounts. (g) Exports of euro notes and/or foreign currency notes are prohibited in excess of €1.000, or the equivalent in foreign currency, per natural person per journey abroad.  The Director of Customs and Excise Department shall ensure the implementation of this measure. (g) Every financial transaction, payment and or transfer which has not been completed prior to the entry into force of this Decree shall be subject to the restrictive measures provided in this Decree: Provided that any financial transaction, payment and or transfer, which has not been processed by the credit institution prior to the entry into force of this Decree shall be cancelled and will have to be submitted anew. (i) Credit institutions shall not execute cashless transfers that facilitate the circumvention of the restrictive measures. (j) The restrictive measures apply to all accounts, payments and transfers regardless of the currency denomination.  Validity of the this Decree. 4.  Exempted from the restrictive measures are: a. All new funds transferred to the Republic from abroad  b. Withdrawal of cash using credit and or debit and or prepaid card issued by foreign institutions on accounts abroad? c. The cashing of cheques issued on accounts held with foreign institutions abroad? d. Cash withdrawals from accounts of credit institutions with the Central Bank. e. The Republic. f. The Central Bank? g. Diplomatic missions? h. Payments that have been authorised by the Committee. 5.  This Decree shall apply for a seven day period starting from the day of its publication in the Official Gazette of the Republic.                                                                             Michalis Sarris                                                                          Minister of Finance

http://www.nakedcapitalism.com/2013/03/yanis-varoufakis-the-good-the-bad-and-the-extremely-ugly-aspects-of-the-cyprus-deal.html

WEDNESDAY, MARCH 27, 2013

Yanis Varoufakis: The Good, the Bad and the Extremely Ugly (Aspects of the Cyprus Deal)

Yves here. The longer you look at the Cyprus “rescue,” the worse it looks. As you can learn from our compendium in today’s Links, the Cypriot economy is already reeling. It’s straining under the extended bank holiday, which is scheduled to end Thursday. Moreover, the impact of losses radiating from number two bank Laiki are already propagating through the island. Businesses that had accounts and will suffer losses are reducing operations or closing and firing staff. Those firms are also canceling or cutting orders with customers, who in turn close or fire staff. Officials are now warning that losses on uninsured deposits in Laiki could reach 80%. It will be more like 100% by the time the dust settles. Paul Krugman argues that Cyprus would have been better off leaving the Eurozone, so it could depreciate its currency and boost its tourism and other businesses. While its Euro-denominated debt is a big offset, Cyprus is going to continue to be subject to the austerian predilections of the Eurozone, and we can see how well that is working out in Greece. A break, though more painful initially, might have been better in the long run.

And that’s before we get to the wider ramifications. Whether Germany understands it or not, it has delivered a fatal blow to the Euro project. How long it continues is anyone’s guess, but the Balkanization of the financial system that the Eurocrats have set in motion means they won’t be able to go the US/Japan zombification route.

By Yanis Varoufakis, Professor of Economics at the University of Athens. Cross posted from his blog

There are some good features of the Cyprus deal and, of course, some bad aspects. However, its repercussions for the Eurozone as a whole are exceptionally ugly and will, I submit, mark a turning point for Europe; a point at which Europe took a nasty turn toward a set of mutually disagreeable outcomes.

The Good

• Unlike the Eurogroup’s original decision, deposit insurance for accounts up to €100 thousand will be respected. The reversal of the decision to ‘tax’ insured depositors constitutes a last minute restoration of common sense.

• Marfin-Laiki Bank’s bond and shareholders will be wiped out – as they ought to. The original Eurogroup decision to let them off the hook (especially the bond holders) while haircutting depositors (including those whose deposits were guaranteed by the state) would have been an indefensible re-ordering of a failed banking system’s creditors.

• The new deal treats different banks differently, as it ought to. The earlier Eurogroup decision imposed blanket haircuts on all accounts irrespectively of the bank’s bottom line. At least now uninsured deposits will be haircut in proportion to the size of the bank’s black hole, thus restoring a degree of private responsibility on the part of depositors viz. their choice of banker.

• By forcing losses on uninsured depositors and the banks’ bondholders, taxpayers have to bear a smaller burden of the bailout loans; and this is, ceteris paribus, a good thing.

The Bad

• The Memorandum of Understanding has not been written up yet and, thus, the deal is utterly incomplete. In particular, we have no idea what degree and type of austerity will be imposed upon a collapsing social economy. Given the troika’s track record, it is almost certain that yet again they will elect an austerian package bound to crush the weaker Cypriots with ever-increasing verve.

• The effect of the complete wipe out of the foreign depositors will have a devastating effect not just on the banking sector but also on the hotel and tourist industry. As a Russian commentator noted: “Now that the Russians’ deposits have been all but confiscated, who will stay in the €500 per night five star hotel rooms on the island? Mrs Merkel?” It is highly doubtful that the troika will factor in the deflationary effects of this aspect in their fiscal consolidation and debt sustainability plans.

• The transfer of €9 billion of ELA money from winding down of Marfin-Laiki to the Bank of Cyprus – it flies in the face of basic banking resolution principles, reflecting the ECB’s Taliban-like defence of what it considers to be its ‘realm’.

• Capital controls have been touted, even though it is not clear how they will be implemented, creating a second-tier euro: Cypriot euros that are no longer exportable (nb. Imagine Vermont dollars that cannot be taken out of Vermont: a logical travesty within a currency union)

And the Extremely Ugly

Setting aside the Cyprus drama and the tragedy awaiting its people, the repercussions of the past week’s shenanigans for the Eurozone as a whole are exceptionally ugly. As I wrote the other day, in one short week Europe has managed to put in jeopardy the sacrosanct concept of state guaranteed deposit insurance (even if, in the end, they took this threat back), to bring back into question the integrity of the Euro-area and to sacrifice the European Union’s single market principle according to which capital controls are inadmissible.

However, the ugliest dimension that the new deal has introduced is the effective end of any hopes of a genuine Eurozone-wide banking union. Mr Dijsselbloem, the new Eurogroup head who seems terribly keen to be more amenable to German thinking than his predecessor, Mr Yuncker ever was, said so in no uncertain terms when rejoicing that the Cyprus deal paves the ground for new bailout arrangements such that the European Union “…will never need to even consider direct recapitalisation” of failing banks. This constitutes the death knell of both the direct recapitalisation agreement reached last in the EU’s June 2012 summit and, naturally, of any meaningful banking union. The message is thus clear: Each to his or her own! All plans to use the ESM in order to de-couple the banking from the public debt crisis are off the table.

The combination of (a) the denial of the need to effect public debt consolidation, (b) the derailing of a meaningful banking union and (c) the heavy-handedness with which Cyprus was treated over the past week, spell a new, uglier, state of affairs in Europe. Up to now, supporters of austerity and of the German approach to the Eurozone Crisis in the deficit countries (including France) have argued that we need to go along with Berlin and Frankfurt so as to inspire sufficient confidence in those who control the purse strings (in our willingness to ‘do our homework’) before they can yield to the inevitable eurobonds, to the logic of a banking union, to whatever it takes to bring about greater political and economic union.

Alas, the Cyprus deal reveals how wrong this view was: Even though peoples throughout the periphery (in Ireland, in Portugal, even in Greece and Italy) have, however grumpily, bowed their heads to severe austerity and the removal of labour protection laws, the powers that be in Berlin and Frankfurt are shifting away from unifying moves, adopting increasingly authoritarian, divisive policies that are pushing the Eurozone in precisely the opposite direction to that dictated by political and economic sustainability.

In short, while the bailing in of inane Cypriot bankers and risk-taking depositors is to be welcome, I would not be at all surprised if the Cyprus week-long episode does not register in history’s annals as a major turning point; as the moment in history when Europe moved beyond the pale.

Read more at http://www.nakedcapitalism.com/2013/03/yanis-varoufakis-the-good-the-bad-and-the-extremely-ugly-aspects-of-the-cyprus-deal.html#eH1t16Op40UpZaUM.99