EU wants Cyprus to exit the crisis, Central Bank Governor says

Cyprus’ Central Bank Governor Panicos Demetriades on Friday said that the EU wants Cyprus to exit the economic crisis and therefore the discussions that will take place in the next days, must result to the best possible solutions.

Cyprus has applied for a bailout on June 25. A delegation from the IMF, the European Commission and the European Central Bank is set to visit Cyprus next week in order to have talks with Cypriot authorities.

Speaking to the press following a speech before a university audience in the coastal city of Limassol, Demetriades said that we must have a clear picture on the economic portfolios of our banks in order to enter into discussions with our EU partners.

He noted that the Central Bank will be part of the whole procedure in order to reach the best possible solution for the banking system.

Replying to a question as to how serious the situation in Cyprus is, he said that it is not a very “happy situation”, however he noted that “it is very manageable”.

“I think that with the support of our European partners, we will be able to find solutions that will help us to promote financial stability and will stabilize the economy”, he said.

He refrained from answering as to exactly how much money Cyprus needs, stressing that this has not yet been estimated.

“I think we will know soon. I don`t want to enter into a discussion of numbers at this stage because it will just be based on speculation”, the Governor said.

As a result of the Greek sovereign bond haircut, capital requirements for the island’s major Banks, Bank of Cyprus and Cyprus Popular Bank reached 3.56 billion euro.

The government decided to underwrite a 1.8 billion euro capital issue by CPB with a view to increasing its Core Tier 1 Capital to 9% by June 30, while BOC announced it requested 500 million euro as state support to complete its recapitalisation. Excluded from the international markets, Cyprus turned to the EU bailout mechanism for financial assistance.