Cyprus, March 2013: The Machines Ran, the Branches Stayed Shut
Banks closed on 16 March 2013 and reopened at noon on 28 March 2013. What happened in between, dated and sourced.
01
The Hour
Early hours
Saturday 16 March 2013. Brussels and Nicosia.
Eurozone finance ministers had been meeting on Cyprus since Friday. In the early hours of Saturday, the Eurogroup issued a statement backing an upfront one-off stability levy on resident and non-resident depositors.
The statement carried no rate. European officials gave the figures that day: 6.75 percent on balances under 100,000 euros, 9.9 percent above.
Cypriot bank officials said depositors could reach all of their money except the amount set by the levy. The banks were due to reopen on Tuesday, after a long holiday weekend.
02
The Sequence
Reconstructed to the day. Hours appear only where the record gives them.
16 Mar
Lines formed at many cash machines, and people withdrew until the machines ran out. The cooperative banks shut their doors after depositors hurried in.
16 Mar
Afternoon. The Central Bank issued the order to halt internet banking, according to Laiki's former chairman, Andreas Philippou, testifying to an inquiry that July. Former finance minister Michalis Sarris told the same inquiry the ECB had asked for online banking to be shut immediately.
19 Mar
Parliament voted on the levy bill: 36 against, 19 abstentions, none in favour. The banks stayed closed.
21 Mar
The ECB said it would hold emergency liquidity at its current level until Monday 25 March, and after that only with an EU/IMF programme in place. Reuters found wholesalers demanding cash on delivery. At one petrol station, an attendant turned away two motorists who had no cash.
21 Mar
Thursday night. Laiki cut its daily withdrawal limit to 260 euros. AP put the previous limit at about 700 euros; UPI put it at 800.
22 Mar
Friday morning. Some shops and coffee shops had put up signs asking for cash only.
24 Mar
Sunday. Cash machines at Bank of Cyprus and Laiki were limited to 100 euros a day, a cap imposed by the central bank.
25 Mar
Early Monday, a new deal with the eurozone and the IMF: Laiki to be wound down, with losses on accounts above 100,000 euros at the two largest banks. Around midnight, the Tuesday reopening was postponed to Thursday.
27 Mar
The finance ministry announced that the banks would reopen the next day, under restrictions. The text is in section 05.
28 Mar
Noon. Banks opened for six hours, for the first time since 16 March. Lines were large and orderly; private security guards stood with police outside some banks and cash machines in Nicosia.
28 Mar
Laiki branches opened late after a delay in the bank's computer system. Cash withdrawals were capped at 300 euros per person per day, and cheques could be paid in but not cashed.
03
The Hidden Dependency
The visible failure was at the cash machine. Behind it sat the payments businesses make to each other: cheques, transfers, and credit between supplier and shop.
By 21 March, Reuters reported wholesalers demanding cash on delivery. The Association of Cypriot Supermarkets said most suppliers had stopped accepting payment by credit and cheque.
A car-parts retailer told Reuters there was no bank to make the transfers, so parts were not arriving on time. AP reported businesses unable to deposit the previous day's takings, pay suppliers or pay staff.
The cash machine narrowed what a household could withdraw. For firms that paid each other by cheque and transfer, the closed branch was the larger break.
04
What Still Worked
Cash machines
Dispensed through the closure on lowered limits. They often ran out, and staff behind locked doors refilled them.
Cards at petrol stations
AP reported the stations' association saying 260 of the country's 280 stations were accepting cards.
Deferred terms between firms
The chairman of Cyprus Airways said it had come to an understanding to make payments that were due as soon as the banks opened.
Part payment in cash
A kiosk worker said suppliers asked for a share, around half, in cash.
05
On the Record
The Document
27 March 2013
The Ministry of Finance announcement issued the day before the banks reopened.
Each customer could withdraw 300 euros in cash per day, at each bank where they held an account. Businesses could transact up to 5,000 euros per day per account and pay salaries.
Card payments and transfers outside the Republic were capped at 5,000 euros a month per person at each institution. The measures were called temporary, to be reviewed daily.
06
The Pattern Library
#1
Cash machines continued to dispense through the bank closure while daily withdrawal limits were lowered and machines ran out of notes.
Observed: Cyprus 2013.
CHANGED TODAY: New library started. Entry #1 added, with Cyprus 2013 as its first case.
