ECB says Cyprus Central Bank's independence should be safeguarded

The independence of Cyprus’ Central Bank (CBC) and of members of the decision making bodies should be safeguarded, the European Central Bank (ECB) says in a legal opinion issued on June 5, expressing thereby concern over potential changes to CBC’s statute by the Cyprus House of Representatives.

A draft bill pending in the House of Representatives foresees that the number of CBC board members will be increased from five to seven, two of which will be executive directors. The ECB’s opinion came as a response to a letter sent by House President Yiannakis Omirou.

According to the ECB, any provision assigning tasks, pertinent to those of a Governor of a national Central Bank, to an executive director or requiring the consent of the Central Bank’s board, raises concerns regarding the Governor’s capacity to exercise those tasks independently, except if the executive directors and the board members are subjected to the same legal requirements and guarantees of independence with the Governor.

It notes moreover that the draft bill lacks clarity with regards to the nature of powers it wants to assign to the executive directors, as well as over the allocation of responsibilities between the Governor and the board.

Moreover, the ECB says the reason behind the increase of board members in not clear, taking into account the appointment of executive directors and the requirement for the board’s consent in decision making.

The ECB finally calls on the House to take the necessary measures to safeguard the CBC’ independence and that of the members of the decision making bodies.