articles | 11 December 2014

Central Bank Governor confident lending rates can be reduced

Central Bank of Cyprus Governor Chrystalla Georghadji will engage in bilateral talks with commercial banks aiming at lower interest rates in the Cypriot banking system.

The governor said that she met on Monday with the heads of commercial bank operating in Cyprus for this purpose and that she is confident a reduction of rates is possible given the current liquidity situation, CNA reported citing Georghadji.

“It is wrong to believe banks have no liquidity,” Georghadji was cited saying by CNA adding that “the vast majority of banks has excessive liquidity which they opt to deposit at the central bank at a negative interest rate”.

The central banker said that while there is low demand for bank loans, at the same time banks are cautious in extending new ones on fears related to their repayment.

Georghadji said, according to CNA, that the best way to have rates reduced via reducing interest rates on deposits via imposing capital commitments, which in turn will help reduce lending rates.

Source: Cyprus Mail

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