Europe Economy

Cyprus out of 'danger zone': Finance Minister

Reported by Michelle Caruso-Cabrera, written by Catherine Boyle
Cyprus has exited danger zone: Finance Minister

The man in charge of shepherding Cyprus from its near-financial disaster told CNBC that the country's situation is improving.

Harris Georgiades, finance minister of Cyprus, said: "We have exited the danger zone, we are stabilizing the situation, we are taking control of the situation, the challenges of course remain, but I think this is what the rating agencies are beginning to register."

Cyprus had its credit rating raised from B-/B from CCC plus/C by ratings agency Standard & Poor's last month. The agency argued that the immediate risks to Cyprus' austerity program had receded.

(Read more: Cyprus banks still struggling)

The bailed-out island imposed currency controls in March amid fears of a run on its banks. One of its biggest lenders, Bank of Cyprus, was recapitalized under the scheme, while another closed down.

Cypriots still cannot use cheques or withdraw more than 300 euros in a day. The nation aims to scrap capital restrictions in early 2014, Georgiades, who was speaking after a meeting with U.S. officials, said.

"The method of the gradual but steady relaxation is the correct one under the circumstances and we shall continue," he said.

(Read more: Bitcoin accepted by Cyprus university)

One of the key issues is of outright capital controls for foreign transfers. This is one way in which Cyprus's banking system has complicated its European Union rescue.

(Read more: Cyprus to lift currency controls by spring 2014)

Its banks are characterized by huge reliance on depositor funding, and relatively few equity- and bondholders, which means that the buffer between the bank and its savers is reduced.

—By CNBC's Michelle Caruso-Cabrera. Follow her on Twitter @MCaruso_Cabrera.