Government sets out euro strategy
A decision about the secondary market in bonds will be taken at the beginning of 2006, according to the Finance Minister Michalis Sarris in an interview with the Financial Mirror, as the ad hoc committee which studied the issue has now finished its work.
Curently the secondary market in bonds in Cyprus is tiny. A properly regulated secondary market is expected to raise liquidity both for the government as issuer and for traders.
However, various actors such as the Cyprus Stock Exchange and the Securities Exchange Commission and the Central Bank have been locked in battle over who will have control of the market.
Sarris said that the government will take into consideration the specific concerns of the Republic of Cyprus as well as international, particularly European Union practice.
“Our chief concern is the creation of a system which will ensure the unhindered financing of the state with the best possible terms and the creation of a market which will offer to investors a secure investment, with satisfactory performance and liquidity,” he said.
Sarris suggested that Cyprus Stock Exchange could be included in the new platform.
Emphasising that as issuer, the Ministry of Finance has jurisdiction over the market, Sarris said: “The Ministry of Finance will decide on the shape of the market, the trading platform and the participating organisations on the basis of concrete criteria which will secure the attainment of the abovementioned objectives”.
“We believe that there are grounds for the involvement of the Cyprus Stock Exchange with whatever alternative solution is chosen, on the assumption that it can satisfy the criteria and goals set by the Ministry.”
Communications strategy for the euro
The Minister of Finance also set out the main objectives of the communications strategy for the euro.
The strategy will be implemented in four stages.
The first will cover the whole of 2006, the second will cover January 2007 to the locking of the Cyprus pound/euro exchange rate, the third will cover the locking of the exchange rate to the introduction of the euro and the fourth the period after the introduction of the euro.
Working in close co-operation with the Central Bank of Cyprus, the government’s main targets are as follows:
*To secure public confidence in the euro and support for entry into the eurozone.
*To raise awareness of the procedures for entry into the eurozone and the requirements for a smooth adaptation of the economy to the euro.
*Awareness and promotion of dialogue about the impact on the economy, the advantages and the challenges (growth, inflation, public finances macroeconomic policy).
*Awareness and promotion of dialogue about the effects on every-day life.
*Timely preparation of the public sector, the business sector, including the retail sector, as well as the financial services sector.
*To identify and take effective action to address the specific concerns of the vulnerable (low-income earners, uneducated, the disabled and pensioners), as well as for foreigners and Turkish Cypriots.
