Cyprus will open its banks, which have been shuttered for days as the nation set a deal with the European Union, European Central Bank and International Monetary Fund for a bailout. Depositors with the largest balances will carry the heaviest load for a “tax” meant to move their savings to the government’s treasury.
Other conditions of the bank reopenings are just as draconian. Depositors will only be allowed to withdraw 300 euros, barely enough for many people to cover a week’s expenses. This money could be held hostage for an indefinite period while Cyprus tries to salvage itself financially. And the restrictions will bring consumer and business to a screaming halt, which is guaranteed to do damage to gross domestic product.
According to Reuters:
Authorities say the emergency rules imposed to limit withdrawals and prevent a bank run will be temporary, but economists say they will be difficult to lift as long as the economy is in crisis.