01THE HOUR
09:00
Saturday, March 16, 2013. Nicosia.
Before dawn in Brussels, Eurogroup finance ministers announced a rescue package for Cyprus that included a one-time levy on all bank deposits held on the island: 9.9 percent above one hundred thousand euros and 6.75 percent below. In Nicosia it was still Saturday morning. Commercial branches were shut for the weekend anyway. Electronic transfers between banks had already been stopped by the authorities. The cash machines still worked.
02THE SEQUENCE
Sat 16
March
The plan was announced overnight. Cypriot officials shut down electronic transfers to prevent electronic runs. Cooperative banks, typically open on Saturdays, were open for part of the morning and then closed as depositors emptied ATMs and ran on them.
Tue 19
March
Parliament rejected the deposit levy by 36 votes against, none in favour, 19 abstentions. The banks stayed shut anyway, under a holiday that was extended repeatedly.
Wed 20
March
Reporting described a shift to cash for everyday transactions. Some petrol stations closed their credit card facilities, and many stores were refusing cheques. Domestic suppliers extended credit; overseas suppliers had less tolerance.
Sun 24
13:00
The Central Bank of Cyprus imposed a daily ATM withdrawal limit of 100 euros at the two largest banks, Bank of Cyprus and Laiki. Laiki had already cut its own limit to 260 euros earlier in the week.
Thu 28
March
Banks reopened for six hours, twelve days after the announcement. A decree capped daily cash withdrawals at 300 euros per depositor per institution. Cheques could not be cashed. The 300 euro limit was abolished by decree one year later, on March 28, 2014.
03THE HIDDEN DEPENDENCY
Card acceptance at merchants weakened during the closure while the card network itself continued to operate. Reporting from Nicosia described handwritten cash-only signs at retail stores and coffee shops, and the Gas Stations Association issued a statement that 260 of 280 stations were still accepting credit cards, in response to complaints that stations were insisting on cash.
A functioning network is not the same as a functioning payment.
04WHAT STILL WORKED
ATM CASH
Dispensing continued through the closure at working machines, on limits, with reporting describing machines that emptied and had to be refilled.
CARD NETWORKS
Continued to operate for the merchants that accepted them. The constraint was acceptance, not the rails.
SUPPLIER CREDIT
Cypriot businesses were reported willing to extend credit or delay payments between parties who knew each other. Overseas suppliers were not.
05THIS WEEK, THEN
FROM THE RECORD
March 24, 2013, 13:00
The Central Bank of Cyprus imposed a 100 euro daily ATM withdrawal limit at Bank of Cyprus and Laiki. Cyprus Popular Bank had cut its own limit to 260 euros earlier in the same week. Bank branches remained closed. They would remain closed for four more days.
06THE PATTERN LIBRARY
1.
Electronic interbank transfers can be stopped by administrative action while ATM cash dispensing continues and card networks remain live.
Observed: Cyprus 2013.
2.
ATM service can remain available during a bank closure while per-account daily limits and cash depletion at individual machines constrain what a depositor can withdraw.
Observed: Cyprus 2013.
3.
Merchant acceptance of cards can weaken faster than the card network itself during a banking closure.
Observed: Cyprus 2013.
CHANGED TODAY: first issue. Five entries added, each carrying a single case from Cyprus 2013. The full library travels at the foot of every issue.
05 The Document
The Document 26 January 2008
The Committee put a box of history in chapter one and headed it 1866 and all that.
It sets out the run of May 1866 on a discount house whose deposits came largely from other banks. The Bank of England declined to support it on 9 May. The following day the firm suspended cash payments. The Bank lent 4 million pounds that day and obtained the Chancellor's agreement to suspend the Bank Charter Act so that it could lend more. In the three weeks that followed, as many as ten banks suspended cash payments.
06 The Pattern Library
1 When one retail withdrawal channel closes or fails, demand concentrates on whichever channel is left open, and the capacity of that channel sets what a depositor can obtain.
Observed: Northern Rock 2007, Cyprus 2013, India 2016, Greece 2015, United States 1933, Argentina 2001, Lebanon 2019, Worldpay 2026, TSB 2018, Afghanistan 2021.
2 A currency replacement can require physical modification of each cash dispensing machine before the new notes can be issued, so the machine estate returns to service site by site rather than at once.
Observed: India 2016.
3 Withdrawal limits imposed on a domestic banking system can be written to exempt cards issued outside it, so one machine dispenses under two rules according to where the card was issued.
Observed: Greece 2015.
4 Domestic payment and deposit channels can continue operating while cross-border payment routes fail, with the central bank standing in as the intermediary for payments to and from the country.
Observed: Iceland 2008, Germany 1931.
5 When the institutions that convert payment instruments into cash are closed, wages and checks already received cannot be spent, and merchants and carriers extend their own credit in place of the missing conversion.
Observed: United States 1933.
6 A public employer short of the national currency can pay wages in an instrument it issues itself, which then circulates alongside the currency it stands in for.
Observed: Argentina 2001.
7 Withdrawal restrictions can be imposed by individual institutions and their trade association rather than by statute, so the limit differs from bank to bank and no law governs it.
Observed: Lebanon 2019.
8 A cash withdrawal ceiling set in nominal units has to be raised alongside the note denominations that pay it, because the ceiling can only be dispensed in the notes that exist.
Observed: Zimbabwe 2008.
9 A payment outage can hit card authorisation and merchant funding as separate faults, so acceptance at the terminal is restored while the money owed to the merchant arrives a day late under its own incident notice.
Observed: Worldpay 2026.
10 A retailer that loses electricity can go on trading by taking cash and rationing goods by hand, so the counter outlasts the checkout system that normally prices and settles the basket.
Observed: Texas 2021.
11 A systems migration can leave account records readable but wrong, including presenting one customer's account to another, so a working login is no guarantee that the balance on the screen belongs to the person reading it.
Observed: TSB 2018.
12 The size of a card processing failure can be counted twice, once on first attempts and once after the same card was presented again, and the second count can be about half the first, so part of the recovery runs through the cardholder at the till.
Observed: Visa Europe 2018.
13 A restriction on access to money can be written by purpose as well as by amount, so a balance that cannot be drawn in general becomes payable when it is used for wages, taxes or relief, and the test applied is what the money is for.
Observed: Germany 1931, Brazil 1990.
14 A deposit freeze can be paired with a transferable certificate issued against the frozen balance, so the deposit becomes a claim that can be sold before it is released, at a price the market sets rather than its face value.
Observed: Ecuador 1999, Argentina 2002.
15 A per head issue of a new currency can be distributed through the administration that issues food rations rather than through the banks, so the ration card is the proof of entitlement and the banks are used to collect the old money rather than to pay out the new.
Observed: Germany 1948.
16 When the persons under sanction become the governing institutions of a country, the prohibition reaches ordinary payments that merely touch the state, and access is restored by successive general licences written by activity, so what decides whether a payment can be made is which licence it falls under.
Observed: Afghanistan 2021.
17 One foreign currency held in one banking system can carry two prices at once, according to whether a balance was credited before or after the date the restrictions began, so the older money converts only at a rate the authority names.
Observed: Lebanon 2019.
18 A payment abroad can be made conditional on prior approval by a committee working to a ceiling set for the whole country each day, so what a firm can pay turns on the capacity of the approval process rather than on the balance in its account.
Observed: Greece 2015.
19 Scarce foreign exchange can be rationed through the commercial banks under published guidelines, with the central bank selling only the net requirement at a daily auction and checking compliance through reporting after the fact rather than approving each payment in advance.
Observed: Iceland 2008.
20 A retail run can be stopped by a public guarantee announced while the counter is still paying, without any change in what the counter can hand over, so the thing that ended the queue was a statement rather than cash.
Observed: Northern Rock 2007.
Changed today: No existing entry gained a case. Entry 1 already carries Northern Rock 2007 for the channel that absorbed the demand. Entry 20 added, on a run ended by a guarantee announced while the counter was still paying out.