Cyprus appointed a new central bank governor and representative to the European Central Bank on Saturday, choosing an academic who has questioned the ECB's emphasis on inflation in defining monetary policy and once suggested Germany should quit the euro.
Panicos Demetriades, a professor of financial economics at the University of Leicester in Britain, will succeed Athanasios Orphanides, whose five-year term leading the central bank ends on May 2. He will also represent Cyprus on the ECB's policymaking Governing Council.
One of the new governor's most pressing tasks will be to oversee the recapitalisation of the island's largest banks, which were heavily exposed to debt-crippled Greece.
"We wish Mr. Demetriades every success in the difficult task he undertakes," said government spokesman Stefanos Stefanou.
Demetriades, a keen blogger, is a critic of the idea that stringent austerity measures alone can turn an economy around, espousing the view that austerity should be limited to an economy's absorption capacity without sinking it into recession.
Perhaps his most notable public intervention was his suggestion last year that Germany should re-adopt the mark currency to help weaker euro zone members. He argued that euro strength as a result of its link to the powerhouse German economy was an impediment to growth elsewhere in the bloc.
"Without Germany in the euro zone, the euro would quickly depreciate to a level that would help reinstate the competitiveness of the periphery," Demetriades wrote to the Financial Times in May 2011.
His letter was a response to suggestions that a "plan B" be devised for an orderly withdrawal from the euro of crisis-hit Greece and Portugal.
Demetriades has also argued for more direct support to states finding it difficult to raise funds on markets.
"I think we have to find a more direct way, more direct lending, to support states from liquidity problems," he told a lecture in the capital Nicosia on April 4.
In articles, he has questioned the ECB's "problematic" mandate of keeping inflation close to, or below, 2%.
"The alternative would have as its primary target recovery and the achievement of healthy growth for Greece and the euro zone," Demetriades wrote in his blog last November.
"So instead of a 2% inflation target, and ignoring everything else … the primary target of economic policy should be increasing GDP by 2 to 3% per annum, in real terms."
