Here are the top business stories in Cyprus from the week starting October 21:

A significant share of Cypriot wealth continues to languish in low-interest bank deposits, despite alternative investment options, according to Phanos Vladimirou, senior investment specialist at Athlos Capital. He attributed this persistent trend to excess liquidity, low competition, and a lack of financial literacy among Cypriots.

“Cypriot banks have some of the highest liquidity ratios in Europe,” Vladimirou explained in a recently published analysis, adding that “the volume of deposits in the domestic banking system is quite large compared to the options available for banks to channel this liquidity.”

Meanwhile, the issue of illicit cigarette consumption remains a pressing concern, accounting for 11 per cent of Cyprus’ total market, as reported in KPMG’s 2023 study for Philip Morris International. Although there has been a slight reduction in this rate, tax losses are still significant, estimated at €18 million.

The report also noted that 100 million illicit cigarettes were consumed last year, predominantly sourced from areas beyond the Republic’s control. Despite a slight decline in outflows to the UK, it remains the largest destination for Cyprus’ illicit cigarette exports. Greg Kamperis, General Manager of Philip Morris Cyprus, highlighted that eliminating illicit tobacco trade remains a “long-term priority.”

On the regulatory front, the Cyprus Securities and Exchange Commission (CySEC) announced on Tuesday that Cyprus Investment Firms (CIFs) are now required to adopt the European Banking Authority (EBA) guidelines on the application of the group capital test by January 1, 2025.

This adoption is set to standardise capital requirement calculations across investment firm groups and ensure firms maintain adequate levels of capital, safeguarding the financial system and protecting clients.

CySEC’s regulatory advancements emerge amidst broader security concerns, as the Cyprus Shipping Chamber raises alarm over escalating Houthi attacks in the Red Sea.

These attacks pose serious threats to global shipping, emphasised by Thomas Kazakos, the chamber’s Director General. He called for heightened international cooperation to safeguard seafarers and protect supply chains from increased costs and delays caused by these disruptions.

Amid these security challenges, Cyprus is also tackling internal issues, particularly the housing crisis. At a conference titled “Housing Policy: From Theory to Practice,” Yiannis Misirlis, president of the Cyprus Land and Building Developers Association, called for bold measures to resolve the housing shortage.

Supported by key ministry figures, Misirlis expressed the association’s commitment to finding radical solutions, especially for vulnerable groups.

In financial news, Cyprus has made a notable recovery in its fiscal balance, with surpluses now surpassing pre-pandemic levels, as noted by Morningstar DBRS.

The agency attributed this improvement to rising social security contributions and higher corporate tax revenues, which have allowed Cyprus’ public revenues to grow at a faster rate than nominal GDP, a trend not widely observed in the Eurozone.

In a related economic outlook, the European Central Bank (ECB) may still have room to cut key interest rates as inflation nears its target, but ECB Governing Council member Christodoulos Patsalides, also governor of the Central Bank of Cyprus, urged caution in removing tight monetary policy too quickly, citing ongoing risks to price stability.

On the diplomatic front, Cyprus recently strengthened ties with India through a roundtable hosted by Invest Cyprus, aiming to bolster bilateral relations and support post-investment activities.

Evgenios Evgeniou, Chairman of Invest Cyprus, noted the strategic importance of cooperation, especially in technology and services, which were focal points in discussions with Indian business leaders.

Further fostering Cyprus’ investment landscape, the Cyprus Investment Funds Association (CIFA) held its Athens roadshow on October 22.

With a focus on Cyprus as an attractive hub for investment funds, the event sought to inform Greek fund managers about regulatory advantages and tax benefits in Cyprus, setting the stage for future collaborations.

On the financial stability front, the Central Bank of Cyprus (CBC) recently highlighted how banks and insurance companies are shaping their investment portfolios differently.

According to CBC’s latest report, banks are prioritising investment-grade bonds, which constitute 92 per cent of their bond portfolios, enhancing portfolio quality while insurance firms continue to diversify to mitigate risks.

CySEC’s commitment to financial education was also spotlighted during World Investor Week 2024, in collaboration with IOSCO.

Through lectures in schools across Cyprus, CySEC emphasised the critical role of early financial education and the growing risks posed by social media influencers on finance, popularly known as “finfluencers.”

At the same time, the Cyprus Union of Shipowners continues to promote the Cyprus flag on the global stage.

Polys Hajioannou, the union’s vice president, underscored the union’s initiatives to enhance Cyprus’ competitiveness and ensure sustainable growth, positioning the Cyprus flag as a preferred choice for shipowners worldwide.

In yet another example of Cyprus’ expanding global ties, Invest Cyprus announced a memorandum of understanding with Invest Paraná, the investment agency of Brazil’s Paraná state.

Signed during the Commodity Supply Chain Conference in Limassol, the agreement aims to foster discussions on future global supply chain trends and build a strong foundation for bilateral cooperation.

CySEC’s active participation in this year’s World Investor Week 2024, organised by IOSCO, was marked as a “complete success,” with initiatives focusing on financial risks associated with online influencers and financial education, further reinforcing CySEC’s commitment to financial literacy.

Addressing housing needs, Cyprus’ Interior Ministry reported a surge in apartment demand, tied to new support schemes aimed at promoting affordable housing.

Initiatives include land allocation for low-income families and urban incentives to increase housing options, particularly in disadvantaged regions.

Amid this national drive for sustainability, Cyprus unveiled its first zero-emission vessel, the Evploia Aphrodite, at Larnaca Marina.

This electric vessel, developed with EU funding, marks a milestone for Cyprus’ shipping industry by reducing coastal emissions and aligning with the Zero Emission Sea Transporter (ZEST) initiative, symbolising a sustainable future for local maritime operations.