The Cypriot government has submitted a bill to parliament giving the finance minister or central bank governor the right to impose capital controls on banks.
"The purpose of this law is, in case of an emergency for purposes of public order or security, to assign powers to the [Finance] Minister, or the [Central Bank] governor to take and impose temporary restrictive measures, including restrictions on capital controls," said the bill.
Parliament is due to sit this evening.
Central Bank Governor Panicos Demetriades earlier said Cyprus would take measures to consolidate its banking sector.
This will include steps to avoid bankruptcy at its second largest lender, Cyprus Popular Bank, Mr Demetriades said.
"By establishing this legal framework, resolution measures will be imposed on Popular Bank so that it will be in a position to continue to offer banking services to its clients next Tuesday," he said.
Banks are due to reopen on Tuesday, having been told to remain shut today and tomorrow. Monday is a public holiday in Cyprus.
Mr Demetriades did not elaborate, but said the steps would protect deposits of up to €100,000.
Earlier, the European Central Bank said it will maintain the current level of emergency liquidity assistance to Cyprus until Monday.