The government of Cyprus has defended a €10 billion bailout deal to save its banks from collapse, amid warnings the island faces deep recession.
The deal protects small savers but the biggest depositors in Cypriot banks are expected to suffer large losses.
The biggest bank, Bank of Cyprus, is to be restructured and the second largest, Laiki Bank, will be wound up.
Banks in Cyprus will remain closed until the end of the week and temporary restrictions will be placed on transactions when they reopen, despite an international bailout.
The Central Bank of Cyprus said the extended closure will ensure the smooth running of the country's financial institutions.
Finance Minister Michael Sarris said Cyprus had avoided a "disastrous exit from the eurozone".
President Nicos Anastasiades, who negotiated the deal with the "troika" of the EU, the European Central Bank and the IMF in Brussels, later addressed the nation in a television broadcast.
He said the deal was "painful" but the best that could have been struck under the circumstances. Controls limiting restricting the movement of capital would be temporary and the president promised to protect the weak, saying welfare payments would be met.
The EU-IMF deal involves a massive restructuring of the Cypriot banking system, as well as austerity measures and tax increases.
Depositors with more than €100,000 euros, many of whom are Russian, will have their savings taxed at a level yet to be set as part of the bailout deal.
The BBC reports the Cypriot government has suggested these account holders should expect to lose about 30% of their balances.
The agreement has been widely criticised in Moscow, but despite this President Vladimir Putin has instructed officials to restructure a €2.5 billion loan extended to Cyprus in 2011 in order to support the restructuring effort.
European and US stock markets fell on Monday after Dutch Finance Minister Jeroen Dijsselbloem said the Cyprus deal could form the template for future bailouts. He later added a clarification saying that Cyprus was "a specific case with exceptional challenges".
