Newsroom / CNA
Konstantinos Herodotou, the Governor of the Central Bank of Cyprus, delivered a robust message at the TechIsland conference in Limassol. Despite recent economic and geopolitical turbulence, Cyprus' banking sector has demonstrated remarkable resilience throughout 2023.
Herodotou highlighted the sector's strength, emphasizing that it has maintained a high level of liquidity. In March 2023, the liquidity coverage ratio soared to an impressive 318%, significantly surpassing the European Union's average of 162.8% for the same month.
Moreover, the Common Equity Tier 1 (CET1) ratio stood strong at 18.9% at the close of Q2 2023, underscoring the Cypriot banking sector's capacity to absorb potential future shocks. Notably, non-performing loans (NPLs) within the banking sector plummeted from 44% in 2017 to a mere 8.7% in June 2023, indicating a remarkable improvement.
However, Herodotou cautioned against complacency in this uncertain economic climate. He urged banks to continue enhancing their balance sheets and adapt to the evolving financial landscape. Central to this adaptation process is embracing digital progress.
Herodotou shared that the Central Bank of Cyprus has initiated efforts to bridge the gap and promote technological advancements in the banking and payments sector. Additionally, an Innovation Hub has been established to foster communication between the CBC, as the regulatory authority, and fintech companies or startups, aiming to support domestic financial innovation.
Innovation in the financial sector, he stressed, is imperative, enabling contactless banking, remote work for financial services employees, and customer-oriented products. While technological advances bring opportunities, Herodotou acknowledged the need for effective risk management and regulation to ensure both financial sector participants and customers benefit from these advancements.
Herodotou concluded with a resounding commitment, stating, "I want to assure you of the CBC's support for all efforts towards technological advancement." Cyprus' banking sector stands poised to navigate the digital future with resilience and innovation.