EDITORIAL: Farewell to Christodoulou

Christodoulos Christodoulou, the outgoing Governor of the Central Bank of Cyprus ended his five year term in high spirit, proud of several important achievements that will be remembered for a long time.

His most important achievement was bringing order to a devastated and shaky banking system, which after the serious mistakes of 1999/2000 had created many problems with a number of banks facing near-collapse.

A weak banking market is the prelude to a weak economy, something that Cyprus, facing the challenge of EU membership, and the continuing occupation of 40% of its land, could ill-afford in 2002.

Fortunately for the country, Christodoulou and his fellow central bankers decided to prescribe some tough medicine for the banks in 2002, and instead of turning a blind eye and allowing problems to pile up, they forced the banks to book the doubtful debts, and in the process forcing all of them into the red, cut dividends and take measures to shore up their capital.

The turnaround in 2005 was phenomenal and since then has been instrumental in powering the country forward.

Christodoulou also unleashed an unprecedented attack against sleepy and totalitarian bank boards, forcing many to resign their seats and others to get their act together or face the same fate. The new requirement according to which only competent and professional people with high ethics and sound finances can join bank boards has brought more confidence to the system.

But Christodoulou will not be remembered only for acting resolutely in shaping up the banks.

The resolute way with which he acted in March 2004 to defend the value of the Cyprus pound, which came under intense pressure ahead of the Annan plan referendum will also be remembered. In March/April 2004 the Central Bank hiked interest rates by an unprecedented 1%, which coupled by other monetary acts was instrumental in shoring up confidence in the currency.

We stand by our statement made in 2004 when we gave Christodoulou the title of “Mr CYP” because without his resolute action and his relentless drive to convince the public that there would be no devaluation then and in the run-up to fixing the value with the euro before joining the euro-zone, things could have gone the wrong way, costing the country untold damage.

Christodoulou is also credited with the smooth transition towards the euro, since without the commitment of the Central Bank supporting Cyprus’ application to adopt the singe Euro currency, things may have been different now. It will be unfortunate that he will not be in charge when Cyprus officially adopts the euro on January 1, 2008, but he will know that he gave a lot and played an instrumental role in the whole process.

As a media group closely involved in economic and financial matters, we shall remember Christodoulou for his balanced approach and his policy of treating all media organisations, irrespective of size, circulation and who the beneficial owners are, as equal.

For the first time, all media had access to data originating from the Central Bank at the same time and without the need to beg for information.

In a small country such as Cyprus where knowing the right “goumbaro” often helps or breaks, it was a pleasure not to worry about that aspect when it came to dealing with the Central Bank.

We wish Christodoulou all the best in future and thank him publicly for his high standards and professionalism.