Local
articles | 06 March 2015

ECB programme details unveiled

The details of the ECB's programme were unveiled recently by its President Mario Draghi, in Nicosia, after the Governing Council of the ECB concluded its meeting there.

Cyprus is not eligible for ECB’s quantitative easing (QE) scheme and there cannot be any exceptions, Governor of the Central Bank of Cyprus Chrystalla Georghadji has said.

“Countries like Cyprus, which are under programme must have a positive review by the troika to benefit from the (QE) programme,” Georghadji told a press conference she held with Draghi.

She noted that the fifth review of Cyprus’ assistance programme has not been concluded yet as a new foreclosures law has not been put in to effect.

“When there is a positive review, then we can start getting a benefit from the programme” she said.

According to Georghadji, Cyprus could benefit up to €500 million throughout the programme, effective as of March 9.

“This programme will have a very beneficial impact on Cyprus as it will suppress the interest rates downwards and therefore the Cypriot government will be able to borrow at lower rates,” she explained.

Cyprus’ bailout programme remains on ice since last September as the Parliament has suspended the implementation of a stricter foreclosure legislation, to coincide with the voting of an insolvency framework – a set of laws governing bankruptcy and borrower protection.

Georghadji said she hoped that the obstacle to the completion of the fifth review would soon be lifted since “there cannot be any exception” in order for Cyprus to participate in the QE scheme.

ECB’s President, replying to a question on Greece, explained “the purchases are not supposed to take place for countries under a programme during the review period. In this sense, we would not be able to buy either Cyprus bonds as well.”

Cyprus agreed in 2013 with the troika of international lenders, namely the ECB, the European Commission and the International Monetary Fund, on a €10 billion bailout which featured a haircut of 47.5% of uninsured deposits in Bank of Cyprus to recapitalize the bank, while Cyprus Popular Bank, the island’s second largest lender, has been wound down with its good part (insured deposits and assets) absorbed by Bank of Cyprus.

Georghadji said that the decisions taken two years ago “were very painful for the country and its people”, however she noted that “under the then circumstances, there was no other way. We should have taken measures long before the verydifficult decision was taken”.

Cyprus Central Bank Governor said “the very few capital controls which are still in place will be very soon lifted, before the end of the first quarter of the year”.

Source: Famagusta Gazette

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