News Column

With Cash Sparse, Cyprus Retailers Shun Credit Cards

March 23, 2013

Christine Pirovolakis, dpa

Nicosia (dpa) - Shoe-shop owner Prodromos Markou says he has no choice but to turn away customers wanting to pay with credit cards.

"What can I do? - I know it is unfair to ask cash for payment at a time when there is a shortage of cash but I am left with no other choice," he says in central Nicosia.

Banks in Cyprus have been closed for nine days to avoid a run by panicking depositors as the government negotiates a bailout.

Some gas stations in the capital insist on cash only. At one pharmacy, a customer said the shop barely had enough change to give her for a package of aspirin purchased using a 10 euro bill.

People can be seen queuing at cash machines across the city.

Supplies, including food, are getting short as businesses struggle to pay for imported goods.

Bank transfers were blocked, prompting parents to wire money to children studying abroad through Moneygram.

Cyprus is under pressure to come up with a plan to raise 5.8 billion euros (7.5 billion dollars) in exchange for a 10-billion-euro bailout from international lenders, including its eurozone partners.

Politicians are trying to put together a new financial package to appease international lenders. At the centre of the proposal is a levy on deposits of more than 100,000 euros.

Parliament this week overwhelmingly voted down an initial plan to tax all deposits. That plan sparked street protests to demand that small deposits be guaranteed by the government.

The European Central Bank has given Cyprus until Monday to devise a new plan to raise 5.8 billion euros or see a halt in financing to its banks.

Rich foreign depositors, mainly from Russia, have millions of euros in banks on the island, which has a large banking sector.

"I do not have millions in the bank - I have managed to save a very meager sum after working hard for more than 30 years and now the government and Europe is placing me in the same pot as the Russians?," said 50-year-old Michalis Mavrou.

Fearing a total collapse of the banking sector, Cypriots were lining up at ATMs across the country, as staff behind locked doors as staff replenish cash machines.

At cash machine outside a branch of Popular Bank of Laiki customers lined up to withdraw 260 euros, a daily limit that was cut down from 700 euros after a decision to restructure the failing lender.

"I am trying to take out as much as possible because at this point I do not know what tomorrow will bring," said Elizabet Antoniou, as she withdrew the daily limit of 700 euros from the Bank of Cyprus, one of the main banks targeted in the tax on deposits.

The cash crunch is hitting people without debit cards hardest.

"I have always just gone to the bank to withdraw money, now I do not have enough money to buy food for the weekend so I am just buying the bare essentials," said 70-year Antonia Demetriou.

Source: Copyright 2013 dpa Deutsche Presse-Agentur GmbH

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