Published on Tuesday, March 19, 2013
The Foreign Office has advised tourists travelling to Cyprus to take pounds and euros as well as credit and debit cards over fears the banking crisis will mean they cannot access money.
The Cypriot Government has announced plans for a saving levy in a bid to protect its banking sector.
The levy has not yet taken effect but action was taken by banks to control electronic money transfers over the weekend.
Banks will stay closed until Thursday in a bid to stop mass withdrawals.
Cyprus' parliament is due to hold an emergency session to debate the big bailout tomorrow, which has angered the public.
The 10 billion-euro (£8.6bn) savings levy agreed by the EU and IMF demands that all bank customers pay a one-off fee.
People in Cyprus with under 100,000 euros deposited must pay 6.75% and those with more than 100,000 in their accounts must pay 9.9%, reports the BBC.
Under the levy plan, bank depositors will be compensated with the equivalent amount in shares in their banks.
It is reported that eurozone leaders, particularly in Germany, insisted on the levy because of the large amount of Russian capital kept in Cypriot banks, amid fears of money-laundering.
But speaker of the European Parliament, Martin Schulz, later argued there should be an exemption from the levy for savers, for example, who had less than 25,000 euros in their accounts.
If the levy goes ahead, it will also affect many non-Cypriots with bank accounts, including UK expatriates.
Overseas arms of Cypriot banks like Bank of Cyprus UK and Laiki Bank UK will not be affected.
Chancellor George Osborne said the UK would compensate any government employees and military personnel whose bank accounts were affected.
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The recent insolvency of Low Cost Travel Group, one of the large players in the travel industry had a big impact on the travelers, hotels and all related players from both wholesale & retail arms. There were about 27,000 people on a holiday who had booked through the company comprised of a €200 million wholesale arm and €500 million OTA / retail arm.