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House to hold extraordinary session on CBC chief’s ‘super powers’

Cyprus Central Bank Governor Panicos Demetriades

 

Parliament will convene in an extraordinary meeting next week to discuss and vote on a bill seeking to amend the law on the resolution of banks and take away the absolute authority wielded by the Central Bank (CBC) governor.

It followed an official request by ruling DISY, which also submitted the amendment.

“It is well known that all political parties said they had a gun to their heads and were forced to vote for a law, which, as they later found out, gave superpowers to a specific one-person authority,” DISY leader Averof Neophytou said.

DISY’s amendment includes other institutions in the resolution authority.

Under a decision in March to ‘bail-in’ Cyprus’ two largest lenders, BoC and Laiki, losses were imposed on large savers in both banks. Laiki is being resolved, with all of its liabilities (including deposits) and some of its assets folded into BoC. The latter has been recapitalised by seizing large savers’ cash via a deposit-for-equity swap.

As the resolution authority, the CBC effectively holds 18 per cent of BoC stock belonging to Laiki.

DISY has accused the Central Bank chief of a conflict of interest – the regulator of the banks cannot simultaneously be implicated in the selection of bank directors whose performance he will later supervise.

Neophytou said the amendments must be done as soon as possible because they “are important and urgent issues.”

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