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Pissarides: An investment in Bank of Cyprus will solve financial sector's problems

06 February, 2014

What Cyprus financial sector needs to resolvc the problems is facing is an investment, Chairman of Cyprus National Economy Council, Nobel prize winner Christoforos Pissarides, has said.
Pissarides, who was speaking to the Press after a meeting the National Economic Council held with the heads of the Troika delegation currently in Cyprus for the third review of the country’s adjustment programme, said that if an investor puts some fresh capital into the Bank of Cyprus, as was few moths ago the case with the Hellenic Bank, then all problems of the financial sector would be resolved.

Referring to the meeting with Troika, he said that they mainly discussed about the economic growth model.
“We believe that in order to create new jobs and reduce unemployment the economy must recover and for this to happen investments are required both domestically and from abroad,” he said.

Pissarides noted that the Council is conducting studies on this issue, which will be ready until the next review by the Troika, adding that the most important thing is to create conditions in order to attract foreign investments, without any fears from investors that they may lose their capital, get trapped into restrictions or problems related with bureaucracy.
Furthermore, he said that there are foreign investors who believe that if they bring their money to Cyprus they will get trapped. This is not the case as fresh capital from abroad are not subject to restrictions, he went on to say, reiterating that it is pivotal to create conditions that will attract investors.

Asked about the banking sector, Pissarides said that a lot has been done so far and that the most important thing is to allow free movement of capital, something that has already started domestically, and to create conditions that will attract a major investor, mainly for the Bank of Cyprus.
The Nobel prize laureate also stressed the need for Cyprus to return to the international markets, noting that this will result in economic recovery and unemployment reduction.

Excluded from the international markets, Cyprus applied for financial assistance to cover its fiscal needs and to rescue its two largest bank hit severely by deteriorating assets amid the financial crisis and by the Greek sovereign debt haircut.
The Cypriot authorities and the Troika (EC, ECB and the IMF) agreed last March on a €10 billion bailout, featuring haircut of uninsured deposits.
So far Cyprus has received two positive reviews on the implementation of the Memorandum of Understanding, the basis of its international bail-out.