Banking in Cyprus
What Banking in Cyprus is Like: One of the primary objectives of the Central Bank of Cyprus is to ensure a safe and stable financial system that would preserve public confidence and foster economic stability and growth. This objective is satisfied by maintaining an effective mechanism of bank regulation and supervision. To this effect, the Central Bank of Cyprus grants a license to carry on Banking Business and exercises supervision, the main objective of which is to minimize systemic risk and preserve the stability of the banking system so as to retain public confidence and to protect depositors.
The Central Bank of Cyprus has always been guided in its supervisory role by the recommendations of the Basle Committee on banking supervision and the EU Directives on banking regulation while following up closely new developments and having its prudential functions under constant review to take account of these developments and changing circumstances. Supervision is exercised by both off-site monitoring and on-site examination. Off-site monitoring entails the submission by banks of an extensive range of periodic returns which cover numerous aspects of banking operations. Any areas of concern revealed through the returns are taken up promptly with the bank involved for remedial action. See some important information about how to open a bank account in Cyprus by following this link: How to open a bank account in Cyprus.
On-site examinations are carried out with a view to assessing the current financial position and soundness of a bank and its future prospects at a given time. In this respect, the following main areas are covered:
- The quality of the management of the bank, including internal control aspects and procedures;.
- The bank’s loan portfolio, with emphasis on credit risk management.
- The quality of the loan portfolio and the adequacy of the provisions for bad and doubtful debts;Costs and the assessment of the returns achieved;
- The compliance with the conditions of the bank’s license and with Central Bank of Cyprus directives, regulations and instructions on capital adequacy, large exposures, etc.;
- Adherence to the requirements of the anti-money laundering legislation and guidance notes.Supervision is exercised by the Central Bank of Cyprus, on a consolidated basis.
A Cyprus Economy Review
Cyprus as member of the E U and the Euro area, is successfully meeting the challenge of being part of the enlarged European family and the Central Bank of Cyprus is making sure that is always respected. Cyprus`s economy is characterised by robustness and macroeconomic stability, which is evidenced by the favourable evaluations and comments of the European Commission, the I M F and other international institutions.
In the period of 2000-2006 according to the statistics of the Central Bank of Cyprus, real GDP grew by an at least of 3,6% per annum, which is favourable with the EU average. This was accomplished in an environment of full employment conditions, low inflation and a stable and strong currency. In 2006 Cyprus’s per capital GDP reached about 93,7% of the EU-27 average. In addition, it should be pointed out that important structural reforms within the context of the Lisbon Strategy are in progress in order to further modernise and liberalise its market-oriented economy, with a view to enhancing its international competitiveness and EU compatibility. These structural reforms, together with macroeconomic stability, provide a strong foundation for the successful participation of the island in the euro area.
Currency of Cyprus is the Euro
On 1 January 2008 Cyprus adopted the euro, the single European currency. More than 310 million people in the 15 EU member states that have adopted the euro now share the benefits of the single currency.
The adoption of the euro after the recommendation and involvement of the Central B ank of Cyprus has brought considerable benefits for Cyprus. Price transparency in the single market of the European Union facilitates price comparability, helps competition and leads to prices which are lower than average. The wiping out of the exchange rate risks helps the trade transactions, thus also leading to lower prices. Travelling and buying goods and services in the euro area countries is now much easier, because citizens will not have the burden of changing currencies every time they travel , and are better able to compare prices since they can use their own currency everywhere. Travelling and buying goods and services outside the euro area is also easier, since the euro is now an international currency and therefore freely accepted in a lot of countries , particularly in tourist destinations. Also, both savers and investors can take a great advantage of many more opportunities for saving and investments, which appear in the unified financial market of the European Union!