Cyprus - What capital controls mean
See 10.18am GMT
We now have details of the 'capital controls' which Cyprus intends to vote into law (sometime) today, thanks to star blogger @YiannisMouzakis:
It's a remarkable set of restrictions on the usual nuts and bolts of the financial system - particularly given the final point:
Restrictions in daily withdrawals
Ban on premature termination of time savings deposits
Compulsory renewal of all time savings deposits upon maturity
Conversion of current accounts to time deposits
Ban or restrictions on non cash transactions
Restrictions on use of debit, credit or prepaid debit cards
Ban or restriction on cashing in checks
Restrictions on domestic interbank transfers or transfers within the same bank
Restrictions on the interactions/transactions of the public with credit institutions
Restrictions on movements of capital, payments, transfers
Any other measure which the Finance Minister or the Governor of Cyprus Central Bank see necessary for reasons of public order and safety
http://www.guardian.co.uk/business/2013/mar/22/eurozone-crisis-cyprus-bailout-russia-vote
Downwinder
(12,869 posts)dipsydoodle
(42,239 posts)Just stops flight of funds from Cyrus and helps stop their liquidity going even further downhill.
Plan B , the National Unity Fund has also now been rejected by the Troica / IMF,ECB.EU ,as being acceptable and apparently Cyprus has gone back to looking a Plan A again which was the original proposal..
Downwinder
(12,869 posts)JoeBlowToo
(253 posts)A bank collects money from people or businesses that want to keep their money in a safe place. These people are known as savers. The bank then lends this money to people or businesses that require additional money to meet their current or future needs.
So, when you deposit money at your local bank, the money does not remain locked away in the bank vault. Instead, the bank lends your money to others in your local community. Whether it is to assist your parents in the purchase of your home or to help your neighbor start his own business, these loans benefit your entire community.
http://www.fdic.gov/about/learn/learning/what/money.html
CanonRay
(14,036 posts)You can't pull funds out of a CD early, and when it is due, you have to roll it over, so then you can't pull the funds out again, and on and on. Basically you can never get your money of of a CD. Add in #4 and you can never get your money. Period.
dipsydoodle
(42,239 posts)at least until the capital controls are lifted as which point I'm guessing the Russians would pull all of their money out within a day and it would go straight back to square one.
Purveyor
(29,876 posts)I'm understanding that correctly.
dipsydoodle
(42,239 posts)you use the expression meaning :
CDs are similar to savings accounts in that they are insured and thus virtually riskfree; they are "money in the bank". CDs are insured by the Federal Deposit Insurance Corporation (FDIC) for banks and by the National Credit Union Administration (NCUA) for credit unions. They are different from savings accounts in that the CD has a specific, fixed term (often monthly, three months, six months, or one to five years), and, usually, a fixed interest rate. It is intended that the CD be held until maturity, at which time the money may be withdrawn together with the accrued interest.
http://en.wikipedia.org/wiki/Certificate_of_deposit
Cyprus isn't in the USA so forget the insured bit. That's other than the first 100k in the case of Europe and that assumes that the government concerned could cover that in the event of all banks going pear shaped - Cyprus couldn't cover that amount.