IMF reiterates importance of cooperation between Cyprus government and Central Bank

Full co-operation between executive branch and Central Bank is key to insure financial stability in Cyprus, IMF reiterated on Thursday.

Asked about Cyprus President Anastasiades’ intention to oust Central Bank of Cyprus Governor Panicos Demetriades, IMF Deputy Spokesman William Murray said: “we have said that before and let me repeat it. We believe that full co-operation between executive branch and Central Bank is key to insure financial stability in Cyprus”.

On Troika’s next mission to Cyprus for the second evaluation of the economy of the country, following the signing of the bailout memorandum, William Murray said that “there will an IMF team jointly with our partners, the EU Commission and the ECB. They will start discussions with the Cypriot authorities in Nicosia on October 29”.

“That will be the second review of the economic program. These missions typically take two weeks. We will expect some type of formal communication on the outcome of the mission”, he concluded.

Excluded from international capital markets since April 2011, Cyprus applied for financial assistance from the EU bailout mechanism, as its two largest banks, Bank of Cyprus (BoCY) and Cyprus Popular Bank (also called Laiki Bank) requested state support following mass losses as a result of the Greek sovereign debt haircut.

The aid package from the Troika featured a sizeable reduction of the island`s banking sector, as well as bail-in of uninsured deposits. Under the package agreed in March, Cyprus closed one bank, the Popular, whereas deposits over 100,000 euro held at the island’s biggest lender, Bank of Cyprus, lost 47.5% of their value, after being converted into bank shares.