Cyprus banks agree to set up sta­bil­ity fund

The Pak Banker - - Company& -

NI­COSIA: Cypriot bankers have agreed to be levied an ad­di­tional tax, as long as money raised goes into a sta­bil­ity fund to help the is­land's bank­ing sys­tem, should it fal­ter.

Cen­tral Bank Gover­nor Athanas­sios Or­phanides sug­gested that such a fund, based on a Swedish model and one that Ger­many is cur­rently set­ting up, would help cush­ion any de­te­ri­o­ra­tion in the bank­ing sec­tor. "This will re­duce the prof­its of the banks, but at least it won't in­crease their costs," he told jour­nal­ists. Yes­ter­day, he dis­cussed the mat­ter with 13 mem­bers of the Cyprus Bankers As­so­ci­a­tion, where the pro­posed levy was tabled at 0.03 to 0.05% of earn­ings.

Or­phanides sent clear sig­nals on Mon­day that the govern­ment should aban­don tax-rais­ing ideas dis­cussed in the past, such as a 'su­per tax' on banks, as they are seen as reap­ing mil­lions in prof­its at a time when the is­land's econ­omy is strug­gling and un­em­ploy­ment has reached new records.

How­ever, the frag­ile cen­treleft coali­tion of the Akel and Diko par­ties want the 60 mln eu­ros raised from the bank's sta­bil­ity fund to be split so as to hold on to half the money in the govern­ment's cof­fers to be used to fi­nance other projects.

If the coali­tion gets its way, split­ting the sta­bil­ity fund would equate to a di­rect tax of the banks, just as was the case of the pro­posed ' su­per tax', a pop­u­lar mea­sure an­nounced to ap­pease voter and labour con­cerns. Or­phanides un­der­lined the need to con­sol­i­date pub­lic fi­nances the soon­est pos­si­ble, adding that any de­lay in tak­ing the nec­es­sary mea­sures would jeop­ar­dise the econ­omy of Cyprus. Pre­sent­ing the lat­est macroe­co­nomic out­look for the econ­omy, Or­phanides said he agreed with those who be­lieve that if no struc­tural mea­sures are taken soon, then econ­omy could be fur­ther down­graded. -PB News

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.