While it is unknown if the Cypriot parliament will agree to, and enact into law, the Troika-demanded deposit haircuts, after the shocking vote of mutiny against Merkel earlier this week that saw not one politician vote for the Europe suggested deposit tax levy (and even the ruling party abstained), a vote which will once more take place tomorrow, moments ago Cyprus became the first Eurozone country to officially implement governmental capital controls into legislation. At this point it had no choice: whatever happens with the deposit haircut, or with everything else, it is now inevitable that the local Cypriots will do all they can to pull as much money from domestic banking system as possible following the complete loss of faith and trust in banks, which is why the government had no choice but to intervene with its own "controls." Sadly, this marks a milestone in the development of the Eurozone - it's all downhill, and accelerating, from here.
For those unfamiliar with the terminology, "capital controls" are laws that restrict the movement of money. Usually they disallow the removal of money from a nation's territorial jurisdiction. In this case, Cyprus, terrified at the prospect of a run against its banks, has legislated:
- 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
Coming soon to a North American constitutional federated republic near you, sports fans. You can bet your last dollar on it...though your winnings might prove hard to collect.
UPDATE: The Cypriot parliament is upping the ante, practically daring Russia to move against the island in defense of the assets of its kleptocrats. (Hey, if you can't trust your money launderer, who can you trust?)