The Central Bank of Cyprus’ (CBC) decision to publish the interest rates being charged by each bank for different types of loans and the rates paid on deposits is a very good idea. Providing an overview of interest rates across the banking sector every month is an excellent service for people, many of whom would not have the time to do their own market research, assuming the banks make this information easily available.

Making information on prices available not only offers people more choice, but also boosts competition. This is true about all products and services and one of the reasons the commerce ministry came up with the idea of the ‘e-kalathi’, which will provide a comparative list of prices of a range of products at different supermarkets. It is currently at the preparation stage, but whether it will ever be completed is another matter. Supermarkets are opposed to it because they are reluctant to engage in open price competition, which could reduce profits.

Admittedly, taking out a bank loan is a bit more complicated than buying a kilogram of minced beef but having the interest rates charged by each bank available is very helpful. And a borrower who has been making prompt repayments on their loan could, realistically, move to a bank that is charging a lower rate. Moving an interest-earning deposit account to another bank might be a bit more difficult as these are agreed for a fixed term. Then again, a depositor could make different medium-term plans in the knowledge that another bank offers a higher rate or negotiate a better rate at his bank.

A glance at the data made public by the CBC showed that for a new fixed-term deposit a customer could get 1.35 per cent at one bank but as much as 2.49 per cent at another. Interest on new housing loans ranges from 3.41 to 5.22 per cent while for new business loans of up to €1m it ranges from 1.88 to 7.38.

Another thing shown by the release of interest rate data was the discrepancy between loan and deposit rates. For example, a bank that charges 5.72 per cent for a new business loan was offering 1.35 per cent on a new fixed-term deposit, which is quite a big difference and the reason many people have complained in the past and the finance minister had written to banks urging them to up their deposit rates. He was ignored because the executive has no authority over how the banks set interest rates.

Minimum lending rates are set by the ECB as part of the eurozone’s monetary policy while deposit rates are decided by each bank. With most banks having healthy reserves of cash, there is no reason to offer higher interest rates for deposits, because they do not want more deposits as most follow a tight credit policy.

Little will change in the way the banks set interest rates by the CBC’s publication of the rates charged by each bank, but the information provided will still be useful to individuals as well as businesses when deciding where to take their custom.