Central Bank Governor hands over duties

Outgoing Governor of the Central Bank of Cyprus Christodoulos Christodoulou hands over post to Athanasios Orphanides, as he heads for retirement, and singles out the introduction of the Euro, expected to take place in January next year, as a very significant move in the fiscal policy of Cyprus.

Speaking at a press conference, on the conclusion of his duties, he said the Central Bank has the manpower and sufficient preparation to tackle successfully future serious challenges, having adjusted and reformed its structure to this effect.

“We are ready, in time, for the introduction of the Euro, provided that all existing capabilities are exploited,” he said, adding that Cyprus has fulfilled the convergence criteria on inflation, interest rates and stability of the exchange rate of the Cyprus pound.

However he cautioned against complacency, saying that attention must continue to focus on the convergence criteria and on public finances.

The Central Bank, he added, will continue to work with all interested parties to ensure that this national objective is achieved.

He said the economic results of the local banking system for 2006 are “particularly satisfactory in that banking institutions continued their upward trend at an alarming rate.”

Christodoulou explained that intense competition in the banking sector in Cyprus and abroad has led local banking institutions to focus their efforts on the introduction of pioneering products and services and to upgrade the quality of service offered to their customers with a view to gain a larger share of the market.

The outgoing Governor called on the banks to intensify their effort for increased profits and stability in their revenue, noting that 2006 was marked by a large rise in takeover bids and mergers in the European banking sector.

Christodoulou said that in 2006 inflation stood at 2.5 per cent compared to 2.6 per cent the year before, the number of registered unemployed dropped to 3.4 per cent of the economically active population compared to 3.7 per cent in 2005.

As for prospects in 2007, he said the gross domestic product is set to rise and inflation is expected to drop.