Central Bank Governor: Euro shielded Cyprus economy

Cyprus’ accession to the euro-area acts as a protection shield against the fallout of the current international financial crisis, the Governor of the Central Bank Athanasios Orphanides believes.
In a message, to mark one year since joining the euro, he said the EU currency, which Cyprus adopted as its legal tender on January 1 this year, provides long-term opportunities and acts as a springboard for the right use of new prospects which open up further progress and development.
“We must have steady adherence to the right choices and the timely drafting of a realistic strategy,” he said, adding that this could help create a stronger and more flexible economy which will be in a position to address successfully intense competition within the euro-area.
Describing accession to the euro-zone “a historic development”, Orphanides recalled that the road to the euro introduced many modern changes which aligned Cyprus with modern economic notions and European reality.
The strategy which was adopted and the wise monetary policy the Central Bank has applied resulted in currency stability and contributed to a great extent to a successful membership of the euro-area, he remarked.
“One of the important benefits Cyprus has experienced from joining the euro is the protection of the economy from negative fluctuations in the world economic environment and this has had tangible value, in particular in the last few months of 2008,” the Governor pointed out.
World economic depression and the negative fallout from the global financial crisis would have affected the local economy a lot more, had Cyprus not jointed the euro-area in time, he said.
This, he explained, is due to the stability of the euro and the global clout it has gained.
“The euro acts as a protection shield for the purchasing power of the Cypriot citizens and generally for a healthy long-term financial framework of the local economy,” he added.
Concluding his message, the Governor of the Central Bank said that one must not override the fact that an open economy, such as Cyprus has, cannot remain totally unaffected by the negative repercussions of the international crisis.
“As no-one can really predict either the duration or the depth of this crisis, the government has to be ready to implement measures, if the worst case scenario, as far as the economy is concerned, come true,” he concluded.