Banks In Cyprus Reopen As Island's Economy Hits Reboot | WAMU 88.5 - American University Radio

NPR : News

Filed Under:

Banks In Cyprus Reopen As Island's Economy Hits Reboot

Play associated audio

Banks in Cyprus reopened Thursday morning — after two weeks in which they had to keep their doors closed as European leaders worked out a bailout deal for the island's struggling financial sector in a bid to keep its problems from triggering similar crises in other ailing EU nations.

As Joanna Kakissis tells our Newscast Desk, "To prevent bank runs, the government has severely restricted cash withdrawals. These controls could last months." Daily withdrawals, for example, are limited to 300 euros (about $384), and no one can take more than 1,000 euros ($1,284) out of the country. Depositors who have more than 100,000 euros ($128,400) in their accounts face heavy taxes.

Even with the restrictions in place, the BBC adds that "branches were replenished with cash overnight and police and private security guards deployed amid fears of a run on the banks by customers."

On Morning Edition, Joanna explained how Cyprus became an international tax haven after 200,000 Greek Cypriots were forced to flee the northern part of the island when Turkish troops invaded in 1974 (current population: about 1.1 million). "Because the best agricultural land was in the north," Joanna reported, the new nation [in the south] based its economy on financial services." And over time, it became a popular place for wealthy Russians and other internationals to park their money.

But Cypriot banks made what turned out to be bad investments — notably, in Greek bonds that went bust after that nation's economy went sour in 2010.

Now, Joanna says, many Cypriots face the prospect of losing their jobs and the country "may have to start from scratch again, just like it did in 1974."

Morning Edition also had a conversation with University of Michigan Law School Professor James Hines about tax havens. According to Hines, the best tax havens are those with strong, transparent finance laws and a free press. Dictatorships, he noted, aren't attractive places to stash cash because dictators tend to make up the rules as they go along and there isn't an independent news media to keep them honest.

The world's biggest tax haven? Hines says it's the U.S. "By some measures, we are the best tax haven in the world, it just doesn't apply to Americans," he said. "We're a great big one, and Britain is probably No. 2."

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

NPR

The Perfect Family Book List

For the holidays, critic Alan Cheuse is making up a list of books to give to each of his family members. Only the best of 2014 for them. Here's his picks.
NPR

Guyanese Christmas Gives A Whole New Meaning To Slow Food

Two classic Christmas dishes beloved by the people of Guyana are pepperpot and garlic pork. To get the flavors just right, you have to cook them and let them sit out for weeks.
NPR

With New Congress, Will Obama Work Differently?

The GOP-led Congress President Obama will have to deal with for the last two years of his presidency is a stark contrast to the Democratic-led one he came in with. Does that mean Obama will change his approach to dealing with Capitol Hill?
NPR

2014 Hashtags: #BringBackOurGirls Made Nigerian Schoolgirls All Of 'Ours'

As part of a series on hashtag activism in 2014, Audie Cornish speaks with Obiageli Ezekwesili of the Open Society Foundation. Ezekwesili was one of the early promoters of the hashtag #bringbackourgirls, about schoolgirls kidnapped in Nigeria in April.

Leave a Comment

Help keep the conversation civil. Please refer to our Terms of Use and Code of Conduct before posting your comments.