The Central Bank of Cyprus (CBC) on Friday announced that it has set the reference interest rate at 11.76 per cent.

In a statement, the Central Bank of Cyprus said that, exercising the powers granted to it under Article 314A of the Penal Code Law, Cap. 154, it has determined the reference interest rate in accordance with the provisions of the said article at 11.76 per cent.

The central bank also stressed that, according to the article, it is an offence for any person who, in the provision of any loan, the granting or extension of the repayment period, the renewal or discounting of a loan, receives, collects, charges, agrees to, or takes for themselves or for a third party, any financial benefit or property advantage that exceeds the reference interest rate.

The ECB has previously said that “reference interest rates serve as a key orientation or benchmark of the prevailing price of liquidity for financial market participants and help in standardising financial contracts for both wholesale and retail clients (e.g. loans for house purchase)”.

“A commonly agreed reference rate is superior to multiple customised interest rates from an effi ciency perspective as it lowers the cost of information and, hence, transaction costs and – ultimately – leads to higher market liquidity. In this way, such rates have a clear social function, making them a public good,” the ECB added.