Central Bank of Cyprus
|Established||14 December 1963|
|Central bank of||Cyprus|
|Succeeded by||European Central Bank (2008)1|
|1 The Central Bank of Cyprus still exists but many functions have been taken over by the ECB.|
The Central Bank of Cyprus (Greek: Kεντρική Τράπεζα της Κύπρου Turkish: Kıbrıs Merkez Bankası), is the central bank of the Republic of Cyprus, located in Nicosia. It was established in 1963. Its current Governor is Constantinos Herodotou The bank issued Cypriot pound banknotes and coins prior to 2008, when Cyprus adopted the euro.
The Central Bank of Cyprus has its origins in the British Colonial Government of Cyprus, which established a Cyprus Currency Board in 1927. This followed on from the unilateral annexation of Cyprus by the British Empire in 1914, the Treaty of Lausanne, establishing the legality in international law of this British takeover, in 1923, and the full establishment of a colonial system of government in Cyprus, with the creation of a Legislative Council, in 1926.
The role of the Chairman of the Currency Board was held by the Accountant General, also known as the Auditor General, of the Government of Cyprus. The Board could issue notes and coins, initially denominated in the Cypriot pound, shillings and piastres, and later, following decimalization, in Cyprus pounds and mils. However, the local currency was pegged at one Cyprus pound to one pound sterling meaning ultimate fiscal control still rested with the Bank of England in London and the Government of the United Kingdom. This link was maintained by the requirement that for every Cyprus pound issued by the Currency Board in Cyprus, one pound sterling issued by the Bank of England had to be deposited by the Government of Cyprus with the Crown Agents in London.
With independence from Britain in 1960, Article 118 of the Constitution of the Republic of Cyprus, which came into force on the island on 1 April 1960, gave the President and Vice-President of Cyprus the right to establish a new central bank, called in the Constitution the 'Issuing Bank' and appoint its Governor. Article 119 sets out the responsibilities of the Governor and the Issuing Bank, Article 120 states that the Governor of the Issuing Bank shall abide by future relevant laws enacted by the Republic of Cyprus, and Article 121 gives the Government of the Republic of Cyprus the right to convert the Issuing Bank into a Central Bank if it wishes. In effect, the Issuing Bank was a continuation of the former colonial Currency Board within the framework of the Constitution of the new Republic, but the Constitution gave the right to the Republic to convert it into a Central Bank if it chose to do so. A decision to do this was taken in 1963, and the Issuing Bank was replaced that year by the Central Bank of Cyprus.
Following the accession of the Republic of Cyprus to the European Union in 2004, the Central Bank of Cyprus became a member of the Eurozone group of central banks in 2008, when the island converted from using the Cyprus pound to the euro currency.
Role of the Governor of the Central Bank of Cyprus
The Governor of the Central Bank of Cyprus is the highest official in the Central Bank of Cyprus and is appointed by the President of the Republic. The position was established in 1963 when the Central Bank of Cyprus was established. The convention is for the Governor to serve a term of five years, but this is renewable.
The Governor has the responsibility of chairing the meetings of the Central Bank's Governing Council and Board of Directors. He or she had the responsibility for setting the Central Bank's policy in relation to the Cypriot economy, but this responsibility passed to the President of the European Central Bank on 1 January 2008, which is also the date that Cyprus changed over to the euro from the Cypriot pound. The Governor is a member of the Governing Board of the European Central Bank.
Anti-Money Laundering/Drug Trafficking and Anti-Terrorism Financing Act 2001 under European Union (EU)
This act is actually renamed from a previous act. The act provides powers to the Bank to preventing Money Laundering/Drug Trafficking and Terrorism Financing. For every fund transferred from offshore/onshore Banks in the Republic Of Cyprus to any other Bank within or outside the Republic Of Cyprus that are above 1 million Euros incurs a 0.20 Percent charge for Anti-Money Laundering/Drug Trafficking Certification. A Payment should be made directly to the Primary Bank where the Trust Funds/Claim is deposited for the period of time, 30 working days should be placed on Funds being transferred and such Funds should be investigated with care. After careful investigation, the Anti-Terrorism Financing Unit Republic Of Cyprus should issue and endorse a certificate to showing that the Central Bank Of Cyprus has fully cleared the Funds while the Anti-Money Laundering/Drug Trafficking should also endorse their certificate at a cost instructed above. The Anti-Terrorism Financing should also incur a cost of 0.15 Percent of the total funds to be transferred and it should be paid under the same condition as stated above.
In all,a mandate of 0.35 percent of the total Trust Funds is required to be paid in full to the necessary Authority/Agent for the Two Certificates to be obtained. Once it is paid, then your Online Banking Portal Username and Passcode should be released to you immediately to affecting your transfer in accordance with the World Bank Policy Of the Republic Of Cyprus Chapter. The Attorney in charge of your Trust Funds has the right to applying for an extension to obtaining these Two Certificates and it must not exceed a validity period of six (6)months from the day the application is approved.
List of the Central Bank of Cyprus Governors till date
- Constantinos Herodotou (April 2019 - current)
- Chrystalla Georghadji (April 2014 - 2019)
- Panicos O. Demetriades (May 2012 - April 2014)
- Athanasios Orphanides (May 2007 – May 2012)
- Christodoulos Christodoulou (May 2002 - May 2007)
- Afxentis Afxentiou (May 1982 - April 2002)
- Christakis Stephani (October 1965 - April 1982)
- Charis Gavrielides (July 1963 - October 1965)
- Central Bank of Cyprus Law, 1963
- Wadan Narsey, British Imperialism and the Making of Colonial Currency Systems (London: Palgrave, 2016) p.159
- Kate Phylaktis, The Banking System of Cyprus: Past, Present and Future (London: Macmillan, 1995), p.42
- As required by Article 13 of the Currency Law (Cyprus) Cap. 197.
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