Banks across Cyprus are expected to be deluged with account holders withdrawing their money despite the setting aside of the controversial deposit tax when the lenders open their door once again on Thursday, March 28. The Central Bank of Cyprus, which ordered all banks closed since March 16 to prevent a bank run, allowed on Monday the banks to reopen by Thursday following a new bailout scheme.

However, the two largest banks - the Bank of Cyprus and Laiki - opened ahead on Tuesday after the government decided to eventually close the Popular Bank of Cyprus or Laiki, transfer all accounts below €100,000 to the Bank of Cyprus and confiscate all deposits above that benchmark to be used to pay the country's mounting debt.

All the banks were originally scheduled to reopen Tuesday after 10 days of closure.

However, there will still be limits on bank transactions which Cyprus President Nicos Anastasiades said was just a temporary measure but will gradually be relaxed, adding to the chaos expected on Thursday.

Besides the complaints that bank staff will receive due to the limits, businesses have warned that they may not be able to pay salaries and bank unions have threatened to hold strike action which could potentially prolong the shuttering of Cypriot banks.

Markets reacted negatively to the U-turn by Eurogroup head Jeroen Dijsselbloem on his previous stand about the bailout that the losses suffered by uninsured depositors in Cyprus banks could be repeated in other parts of the bloc.

Finance experts warned that with the decision, investors would be wary once other weak eurozone members such as Italy, Spain or Greece would need another round of bailout since it would risk more bank runs and bond market selloffs.

"We now have a new type of rule and everyone within the euro zone has to sit down and see what that implies for their own finances," Bloomberg quoted Nobel laureate Christopher Pissarides who is an adviser to the Cypriot government.

"The Cyprus crisis has opened up some precedents that will make investors more worried about how future euro zone crises will evolve," added Steven Englander, head of the Group of 10 currency at New York's Citigroup.

While Cyprus barely escaped from being the first to leave the eurozone following its securing a bailout from international creditors, the move could end Cyprus's status as an offshore tax haven and financial services hub.

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