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Cyprus businesses hurt as banks stay shut

| Tuesday, March 26, 2013, 10:06 p.m.

NICOSIA, Cyprus — Cypriot businesses were under increasing strain to keep running on Tuesday, when financial authorities stretched the country's bank closure into a second week in a harried attempt to stop depositors from rushing to drain their accounts.

Cyprus's Central Bank governor, Panicos Demetriades, said “superhuman efforts are being made” to open banks on Thursday.

“Temporary” restrictions will be imposed on financial transactions once the banks do open, he said, but he would not specify what they would be or how long they would be in place.

“We have to restore the public's trust in banks,” he said.

Finance Minister Michalis Sarris said the restrictions would help stem any mass deposit withdrawal that is “bound to happen” and that they would be removed in a “relatively short period of time.”

“I think every day (banks) are not open creates more uncertainty and more difficulties for people, so we would like to do our utmost to make sure that this new goal that we have set will work,” he said.

All but two of the country's largest lenders had been due to reopen on Tuesday, since being shut on March 16 to stop savers from withdrawing all their money while politicians figured out how to raise the funds necessary for Cyprus to qualify for an international bailout.

However, late Monday, authorities announced that the bank closures would be extended, giving officials more time to initiate a major overhaul of the banking sector and devise capital controls to limit the amount of money that can be taken out of accounts.

“We have to all understand that we live in very critical times. Officials of the government and the Central Bank are working day and night,” Demetriades said.

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