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Cyprus makes further relaxation of financial controls

Cyprus has scrapped more financial restrictions imposed after its international bailout in March, taking a further step towards undoing currency controls designed to prevent a run on its banks.

The finance ministry said it had scrapped a requirement for supporting documentation on domestic business transactions exceeding €300,000, though a bank could still seek such information if it deemed it was necessary.

The ministry also raised the threshold for businesses making transactions abroad to €1 million for each deal from

€500,000.

Cyprus’s finance minister had told lawmakers on Monday he anticipated all currency controls related to domestic transactions would be lifted by spring 2014.

Friday’s decree was the 22nd since the island became the first euro zone member to enforce capital controls at the end of March. It is applicable until November 24.

Under the strict financial controls, travellers abroad could initially not shift more than 1,000 euros out of the country. This has now been raised to €3,000.

There have also been relaxations on the amount of money individuals could transfer from one bank account to another for payments, with the limit now set at €15,000 without the need for approval.

In return for €10 billion in aid from international lenders, the island in March agreed to wind down one major bank – Laiki – and impose losses on depositors in a second under-capitalised bank, Bank of Cyprus.

Other subsequent restrictions such as a €300 daily withdrawal limit for individuals, a ban on the cashing of cheques, a ban on breaking fixed-time deposits and the opening of an account at another bank remain in place.

European Central Bank data on Friday showed cash withdrawals from the Cypriot banking system had slowed in September.

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