Cyprus banking system can cope with serious problems in Greece

Referring to the dialogue between the government and the social partners on state salaries and pensions, Stavrakis said that within the next few days solutions must be found, that will strengthen the local economy against major external risks.

Asked how Cyprus is affected by the situation in Greece, Stavrakis said that ''the situation in Greece is really critical,'' adding that he had just attended a meeting of the Eurogroup which discussed problems of the Greek economy and that there will be a new meeting of the Eurogroup and ECOFIN next Monday.

“This is a problem that affects Greece but also all other European markets. Cyprus is certainly affected. We are a small country in the South and we have a banking system which has invested significant amounts in Greek bonds,” the Minister pointed out.

He added that some rating agencies and other analysts believe that the links between the two banking systems can affect the real economy of Cyprus, noting however that “our banking system is very robust and has a strong capital base.”

The Minister welcomed the recent capital increase the big banks in Cyprus have achieved, noting that there has been an important increase in foreign deposits.

''We believe that even if Greece, theoretically speaking, faces serious problem, our banking system will be able to cope with them,'' he added.

Stavrakis also stressed that “we remain committed to our effort for further fiscal consolidation, to achieve a deficit this year under 4.5%, to stabilize public debt close to 60% and perhaps most importantly to solve the major structural problems, as the state salaries and pensions.''