Raj Ouellet - Capital Control is Back, Protect your money

March 30, 2013 - PRLog -- The "foreign travel allowance" was not lifted until the early 1970s, although it was already widely flouted. The Daily Mail reported in 1968 that four out of five Brits questioned on holiday on the Greek islands had stuffed extra sterling in their socks before leaving home. Now Cypriots face the same kind of controls – and possibly for months or even years to come. Expect customs officers at Larnaca airport to be on the look-out for oversized shoes and well-padded thighs.

Capital controls are an extraordinary breach of basic EU rules, which allow freedom of labour and capital movement. Indeed, article 63 of Europe's internal market rules explicitly states that "all restrictions on the movement of capital between member states and between member states and third countries shall be prohibited" unless there is an issue of "public security". But there are few signs of the EU enforcing article 63 when it comes to Cyprus.

Cypriot politicians declare that the capital controls will last only briefly (without giving dates) – and, of course, no one believes for a moment that they will ever be reimposed in the UK. Of course no one believed interest rates would fall to 0.5% or that the banks would collapse …