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Cyprus further eases capital controls

Cyprus took another step toward ending the Eurozone’s only capital controls, imposed last March to avoid a run on the banks during bailout negotiations.

NICOSIA: Cyprus took another step on Friday toward ending the Eurozone’s only capital controls, imposed last March to avoid a run on the banks during bailout negotiations.

Finance Minister Haris Georgiades issued a decree abolishing the banks' ability to automatically renew fixed-term deposits. Customers may now have access to the full value of their money at the time of expiry, or even cash in earlier with a penalty.

The decree also increases the monthly limit on domestic money transfers for individuals from 15,000 euros (US$20,550) to 20,000 euros and for companies from 75,000 euros to 100,000.

But key restrictions remain in place such as daily bank withdrawal limit of 300 euros, the inability to cash cheques and a limit of 3,000 euros per person per trip allowed to be taken out of the country.

Fears of a bank run forced the government to close all the island's banks for nearly two weeks last March and impose the draconian controls when they reopened.

The government says it is able to gradually ease restrictions because it has passed three reviews from the troika of international lenders that provided it with a 10 billion euro bailout last year, which allowed a recapitalisation of the banking sector.

Last week, Central Bank Governor Panicos Demetriades said the country could abolish all controls by the end of 2014 if sufficient progress were made in fulfilling the bailout programme and investor confidence fully restored.

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