The European Commission reminded in a statement made on 28 March that an exception to the principle of the free movement of capital must be interpreted very strictly and be non-discriminatory, suitable, proportionate and applied for the shortest possible period. This statement was made in the light of the capital controls imposed by the Republic of Cyprus that will remain in force for 7 days.

The European Commission will monitor closely the temporary restrictions on the free movement of capital, including capital controls, imposed by the Republic of Cyprus as part of a series of measures to prevent the significant risk of uncontrollable outflow of deposits which would lead to the collapse of the credit institutions and to the immediate risk of complete destabilisation of the financial system of Cyprus. On the 25th of March, the Eurogroup and the Cypriot authorities reached an agreement for the financial aid programme application.

The Commission will monitor closely with the Cypriot authorities, other Member States, the ECB and the EBA the implementation of the imposed restrictive measures on capital movements. These restrictive measures will remain in force for 7 days. The Commission also highlighted that in current circumstances, the stability of financial markets and the banking system in Cyprus constitutes a matter of overriding public interest and public policy justifying the imposition of temporary restrictions on capital movements. The Commission also stressed that the free movement of capital should be reinstated as soon as possible in the interests of the Cypriot economy and the European Union's single market as a whole.

According to the Commission, member states may introduce restrictions on capital movement, including capital controls, in certain circumstances and under strict conditions on grounds of public policy or public security. In accordance with the case law of the European Court of Justice, measures may also be introduced for overriding reasons of general public interest.