Cypriot banking crisis

There are indications that large sums flowed out of the two banks, Laiki and the Bank of Cyprus, the two institutions that have been hit hardest by the Cypriot banking crisis. Large sums left Cyprus just before the first bailout package was signed in the early morning hours of March 16. At the end of January, some 40 percent of all savings held in Cypriot accounts were on the books of those two banks. Since then, however, much of it has been transferred elsewhere, despite orders from the central bank that accounts at the two institutions be frozen. Transfers for humanitarian aid were permitted which opened a loophole for abuse. Many are also furious that the bank allowed "special payments," the definition of which was never adequately established. The Cypriot central bank has defended itself by saying that it was impossible to completely prevent all transactions, despite the account freeze. Much of the money was withdrawn from overseas, where Cyprus had no authority. Branches of Cypriot banks in non-euro-zone countries such as Russia and Britain do not answer to the European Central Bank. Their liquidity is controlled by central banks in those countries. Lawmakers have demanded that the central bank assemble a list of those customers who withdrew large amounts of money prior to the closure of the country's financial institutions. In particular, parliamentarians want to know if central bank employees or members of the government received early warning and were able to quickly rescue their assets.