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Cyprus limits size of bank withdrawals

Protests continued in Cyprus Wednesday. The president opened a criminal investigation into how banks nearly collapsed.

Angelos Tzortzinis/New York Times

Protests continued in Cyprus Wednesday. The president opened a criminal investigation into how banks nearly collapsed.

NICOSIA, Cyprus — The government announced severe restrictions Wednesday on access to funds held in Cyprus’s banks, hoping to curb what is nonetheless likely to be a rush to withdraw money when the banks open Thursday for the first time in nearly two weeks.

The measures, which are supposed to be in effect for a week but could be extended, prohibit electronic transfers of money from Cyprus to other countries. In addition, individuals will not be allowed to take more than 3,000 euros in cash outside the country, well below the current ceiling of 10,000 euros, or $13,000.

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The cap on ATM withdrawals will rise to 300 euros per day, or about $422, from 100 euros, but credit and debit card charges will be capped at 5,000 euros per person per month. Banks will not cash checks, though they will accept checks as deposits. Bank clients will not be able to withdraw money from fixed-term deposits before their maturity date.

‘‘This is a typical set of exchange control measures, more reminiscent of Latin America or Africa,’’ said Bob Lyddon, the general secretary of IBOS, an international banking association. ‘‘There is no way these will only last seven days. These are permanent controls until the economy recovers.’’

To make sure enough cash is on hand, the European Central Bank sent an airplane filled with about 1.5 billion euros in a container to Larnaca airport near Nicosia. It was loaded onto a truck and escorted by police to the central bank, said a person with knowledge of the operation. The person said the ECB had indicated it would continue flying cash to the country as needed.

Finance Minister Michalis Sarris said a flood of withdrawals was bound to happen, but restrictions would at least help stem a mass flight of deposits.

Cypriot authorities are bracing for as much as 10 percent of the 64 billion euros on deposit to be pulled out Thursday.

Some experts predict a much bigger bank run whenever the controls are eventually lifted.

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