In the deal hammered out in Brussels on Monday, people with over €100,000 ($153,315) in the two biggest banks will have their deposits frozen. Those with under €100,000 in the second biggest bank, Laiki, would have their money transferred into the Bank of Cyprus, with Laiki eventually shut.
These and other measures are expected to raise the €5.8 billion that Cyprus needs to qualify for the €10 billion bailout from the IMF and European Central Bank (ECB).
Demetriades tried to reassure people worried about the future of the largest bank, saying that the merger of the Laiki and the Bank of Cyprus "will give us a very strong bank".
Earlier in the day Cypriot Finance Minister Michael Sarris confirmed that those with uninsured deposits above €100,000 in Laiki bank could lose 40 per cent of their savings. But how long it will be before they can access the remainder of their money remains unclear.
The banks were meant to reopen yesterday, but the Government announced on Tuesday that they would remain closed until tomorrow as they tried to work out what capital control measures were needed to prevent the exodus of cash from the country. The BBC reported that the measures being considered included a weekly withdrawal limit at cash machines, a ban on cashing cheques, and the requirement that fixed-term deposits must be held until maturity.
- Independent