Investors have cheered Cyprus’s abandonment of capital exchange controls, ending a period in which one of the eurozone members was effectively plugging a capital flight drain by breaking the free trade zone’s rules.
The controls have been steadily ratcheted back for the last 18 months since their imposition in March 2013, and with Cyprus’s banking sector now totally unbundled from crippled Greek interests exposure has been cut and the country is again open to all market forces.
Getting out of the Greek banking market was what Cyprus’s creditors demanded in exchange for a 10 billion euro loan.
Bank of Cyprus was forced to seize a portion of clients’ uninsured deposits and convert it into equity to recapitalise in 2013, while the second-largest bank at the time, Laiki, was wound down. Since then Cypriot banks have bounced back.