CBC Liquidity in real economy after the stress tests

The Governor of the Central Bank of Cyprus (CBC) Chrystalla Georghadji has expressed optimism as regards the European Central Bank`s stress tests on the Cypriot banks and said that after the conclusion of the stress tests, commercial banks could begin lending the real economy.

Speaking before the House of Representatives` Committee on Institutions, she said that Cypriot banks have no liquidity problems, adding that on the contrary, in view of the stress tests, banks maintain their liquidity to the CBC and pay interest due to the ECB`s decision to impose negative interest on bank deposits at Central Banks.

“I believe that if we manage the situation after the outcome of the stress tests, this liquidity at the CBC will be given to the real economy”, she pointed out.

She described the forthcoming stress tests as the cornerstone for strengthening confidence in the banking sector.

“I am optimistic that the outcome will be manageable”, she stressed.

As regards non – performing loans, she said that between the 1st of January to the 30 of June 2014, a total of 2,2 billion euro loans have been restructured, corresponding to 8,06% of total non – performing loans.

The Governor acknowledged the fact that there is a problem in managing loans especially after the economic crisis and said that if a bank does not get its money back, it cannot lend either.

The ECB will announce its EU-wide stress test results on October 26th.

In Cyprus, banks to undergo stress tests include the Bank of Cyprus, the Hellenic Bank, the Cooperative sector and the RCB (Russian Commercial Bank).