Central Bank denies knowledge of ERM2

But evidence seems to mount

Following the Financial Mirror’s report that the Cyprus pound could enter the Exchange Rate Mechanism (ERM2) either on Monday May 2 or on Monday May 9, the Central Bank quickly issued a denial on Wednesday of any knowledge about the issue.

“With reference to an article in a weekly newspaper, which is attributed to so-called Central Bank sources, and in accordance with which the entry of Cyprus and two other member states of the European Union into the Exchange Rate Mechanism II is imminent, the Central Bank of Cyprus officially announces that it has no knowledge or information on the issue,” said the Central Bank statement.

Of course, officially, the Central Bank is obliged to keep silent on the issue. And, as we reported, the official we spoke to who said that the call could come this Wednesday or next Wednesday did also emphasise that they never know in advance exactly when the invitation will come.

However, other developments have kept the rumour mill spinning.

First, the Finance Minister’s Permanent Secretary Patsalides is said to be in Frankfurt, and at least one if not two senior central bank officials are also on a working trip abroad this week, possibly in Frankfurt.

Second and rather more speculatively, the lights were switched on at the top floor of the Central Bank late on Wednesday night, leading some to assume that the top officials had an important reason to work late.

Last, but not least, statements by Finance Minister Makis Keravnos on Wednesday were taken as another big hint that something important was on the way.

When asked if he was going to be leaving his finance ministry post for the top job at Hellenic Bank, he said “…I remain minister. We have many serious issues before us in the coming days and very serious developments.”