Statement by the European Commission on the capital controls imposed by the Republic of Cyprus
EU News 158/2013
Brussels, 28 March 2013
The Commission takes note of temporary restrictions on the free movement of capital, including capital controls, imposed by the Republic of Cyprus as part of a series of measures to prevent the significant risk of uncontrollable outflow of deposits which would lead to the collapse of the credit institutions and to the immediate risk of complete destabilisation of the financial system of Cyprus.
As guardian of the Treaties and to safeguard the integrity of the single market, the Commission made a preliminary assessment of the Cypriot law and relevant decree under the rules on the free movement of capital set out in Articles 63 et seq. of the Treaty on the Functioning of the European Union.
Member States may introduce restrictions on capital movement, including capital controls, in certain circumstances and under strict conditions on grounds of public policy or public security. In accordance with the case law of the European Court of Justice, measures may also be introduced for overriding reasons of general public interest.
Such exception to the principle of the free movement of capital must be interpreted very strictly and be non-discriminatory, suitable, proportionate and applied for the shortest possible period.
In current circumstances, the stability of financial markets and the banking system in Cyprus constitutes a matter of overriding public interest and public policy justifying the imposition of temporary restrictions on capital movements.
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