Cash is King on Cyprus

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by Richard Giedroyc

April 9, 2013 – Its amazing just how much we appreciate our coins once they are gone. Ask any merchant on Cyprus, where the economic chaos has recently involved the government declaring a bank holiday through which the only way you can get cash is from an Automated Teller Machine.
Even if you are fortunate enough to get money from an ATM that hasn’t yet run out you are getting euro bank notes, not coins. What does this mean? This is instant inflation! All prices are being rounded to the closest euro bank note denomination rather than to euro cents since those so-called minor denominations simply aren’t available.
Cyprus, being a member of the European Union’s currency union since 2008, uses the same coins and bank notes as does all of its compatriot EU states. Due to the banking holiday meant to prevent a run on banks by depositors there simply are no coins to be had other than those that were already in consumer’s pockets. Cyprus has suddenly found itself to be on a cash economy. Credit, debit, and smart cards simply don’t work. Merchants are in no mood to accept them even on paper, hoping to be able to receive their money once this banking crisis passes.
Merchants want cold cash, and they aren’t reported to be generous giving out change. That’s because there isn’t a lot of change to give out. Remember, the smallest bank note in use is the €5. Anything smaller is in the form of a coin, and coins simply aren’t available until the banks reopen.
In the mean time taxis are reported to be charging a flat fee of €5 or €10 for short trips simply due to a lack of lower denomination euro coins. Wholesalers have been reported demanding cash on delivery, where in the past net payment in 45 days had been acceptable terms. Some merchants have been forced to turn customers away since they don’t have the cash for small transactions like buying a newspaper.
When the banks reopen there is a big question regarding if there will be sufficient coins, especially the €1 and €2 denominations, to keep up with demand. Cyprus is suddenly a nation painfully aware that the bottom line is that coins are still the basis of their economy, not the bank notes, checks, and plastic wizardry that are so often used as convenient substitutes. It time to get back to basics!