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Cyprus finance minister quits, capital controls partly eased

Cyprus finance minister quits, capital controls partly eased
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Cypriot Finance Minister Michael Sarris quit on Tuesday after concluding talks with foreign lenders on a bailout that forced the island to slap unprecedented losses on bank depositors in return for aid. M. Haris Georgiades, the former Minister of Works, will be the new Finance Minister.

The news came after Cyprus announced a partial relaxation of currency controls, raising the ceiling for financial transactions that do not require central bank approval, but keeping most other restrictions in place.

Sarris, who was dispatched to Moscow last month but returned empty-handed as Cyprus sought Russian aid after rejecting a European bank levy proposal, said his main goal of agreeing a deal with lenders had been accomplished.

He said it was also appropriate to resign since he was among several people under scrutiny by a team of investigators looking into the collapse of the country’s banking system. His resignation was accepted by the government.

“I believe that in order to facilitate the work of (investigators) the right thing would be to place my resignation at the disposal of the president of the republic, which I did,” Sarris said. Before quitting, he said it was not clear when the remaining capital controls would be lifted.

The island introduced curbs on money movements when banks reopened on March 28 after a two-week shutdown while the government negotiated a 10 billion euro bailout from the International Monetary Fund and the European Union.

Cyprus’s status as a financial hub has crumbled in the space of a fortnight after authorities were forced to wind down one bank and slap heavy losses on wealthier depositors in a second in return for the financial aid. Its capital controls are a first for the euro zone, introduced by Cyprus as it strives to prevent a cash drain.