http://www.nytimes.com/2013/07/10/world/europe/currency-controls-in-cyprus-increase-worry-about-euro-system.html?_r=0&pagewanted=print
On a visit to Athens this year, Marios Loucaides, a Cypriot businessman, saw an apartment he liked in the heart of the Greek capital and decided to buy it. He told the owner he would seal the deal with a bank transfer — the price was 170,000 euros, about $220,000 — once he got back to Cyprus. After returning home, however, Mr. Loucaides discovered that the euros he had on deposit here in Nicosia, the capital, could not be moved to Greece, even though the two countries share the same currency and, in theory at least, the same commitment to the free movement of capital. The apartment deal collapsed. And so, too, did Mr. Loucaides’s belief that Europe has a common currency. Tangled in restrictions imposed in March as part of a bailout for the country’s ailing banks,
a euro in Cyprus is no longer the same as one in France, Germany or Greece.
“A Cyprus euro is a second-class euro,” said Mr. Loucaides, the managing director of the Cyprus Trading Corporation... The rules of the European Union, enshrined in the 1992 Maastricht Treaty, ban restrictions on the movement of capital, but the measures by Cyprus have been endorsed by the European Central Bank and the union’s executive arm, the European Commission, as essential to prevent money from fleeing the country. While the European Central Bank declined to comment on the Cyprus situation, officials in Brussels say they remain firmly committed to maintaining the euro as a single currency.
Nevertheless, many financial experts say Cyprus has, in effect, made a “silent, hidden exit” from the euro, said Guntram B. Wolff, the director of Bruegel, a Brussels research group. Despite a softening of restrictions, he added, “the euro in Cyprus is still not the same as a euro in Frankfurt.”
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