Cyprus Eases Capital Controls, Seeks Better Bailout Terms
Cyprus partially curbed capital controls on Tuesday, marginally freeing up the movement of money within the country. Capital flows were restricted on March 28, following a two-week bank closure that was the result of bailout negotiations involving the nation’s top two banks.
After sending a few shock waves through financial markets around the world, Cyprus reached a bailout agreement with the Troika worth 10 billion euros ($12.8 billion). As initially proposed, the terms of this deal called for a 6.7 percent charge against deposits of less than 100,000 euros, and a 9.9 percent charge against deposits over that amount. Unsurprisingly, Cypriot policymakers shot the proposal down in a landslide vote.
After the Troika’s proposal was swept off the table, the European Central Bank let Cyprus know that the decision left the ball in its court. The ECB gave the nation just a few days to put some sort of official bankruptcy plan into motion or it would withdraw emergency liquidity assistance to the nation’s banking sector, which was (and still is, really) sitting with both feet over the edge of collapse…