Cyprus & World News

Auditor general is new Cyprus centralbanker from April 11

11 March, 2014

Auditor General Chrystalla Yiorkadji takes over as new Central Bank Governor on April 11, after incumbent Paniccos Demetriades steps down after two years in office and returns to his economics professorship in the U.K.

She will be the first woman to take up this post in the Republic’s 54-year history with the last 12 months being the most tumultuous for the island’s economy that neared financial meltdown but was rescued by an international bailout of 10 bln euros.
President Nicos Anastasiades already had a telephone communication with the President of the European Central Bank, Mario Draghi, on Tuesday morning whom he informed about his decision, said government spokesman Christos Stylianides.
Speaking earlier, Anastasiades said that there was no trade-off with Demetriades who announced his resignation on Monday, ending months of political wrangling over the centralbanker’s mishandling of the economic crisis.
The conflict climaxed several months ago when the president sought advice from the Attorney General if there was any way to sack Demetriades. At the time, reports suggested that the Governor wanted full compensation of EUR 1 mln to leave his post and the government offered 400,000. But an investigation into the methods used to hire consultants Alvarez and Marsal probably acted as a catalyst, with Attorney General Costas Clerides saying that his case was not solid to try it in court. He has reportedly accepted a severance of 265,000 euros.
Demetriades handed his resignation to Finance Minister Haris Georgiades during the Eurogroup meeting of Eurozone finance ministers in Brussels on Monday in the presence of an ECB official.
He is expected to return to his economics professorship at Leicester University from where he had been hand-picked by former president Demetris Christofias, whose communist administration is widely blamed for the demise of the economy and the collapse of the banking system. But a conflict with the previous central bank chief, Harvard professor Athanasios Orphanides, over the lax oversight of the Cypriot banks during the Greek bonds crisis, made the Governor’s office the thorn in the administration’s side.
Worse still, Demetriades’s knowledge that second largest lender Laiki Popular Bank was on the brink of bankruptcy only came about after he admitted that Christofias urged him not to say or do anything. Demetriades is reported to have said recently that he could no longer work with the members of the central bank council, appointed by Anastasiades to keep the Governor in check.
New Governor Yiorkadji will now have to oversee the austerity measures imposed by the ‘troika’ of international lenders (ECB, IMF, European Commission) and ensure fiscal policy is in line with plans of recovery, exit from the recession, return to growth and bring down unemployment.