Cyprus has now enacted all the new laws required to align
its legislative framework with the 2014 EU Bank Recovery and
Resolution Directive (BRRD) and the 2014 Deposit Guarantee
Schemes Directive. These provide a unified framework for the
recovery and resolution of entities active in financial markets
and for the protection of depositors.
Cyprus had already established a comprehensive framework of
this type in 2013, before the directives were adopted. After
the directives became the new European standard for the
recovery and resolution of credit institutions and investment
firms, it was necessary to replace the existing domestic
legislation to align it with the directives and provide a
unified structure for the entire financial sector.
The new Deposit Guarantee Scheme and Resolution of Credit
and other Institutions Law was enacted in February 2016. In
April 2016, the remaining two laws which were required to
complete the legislative framework were enacted. They are the
Recovery of Cyprus Investment Firms and Other Entities
Supervised by the Cyprus Securities and Exchange Commission Law
and the Resolution of Credit and Investment Firms Law.
The BRRD provides for three decision-making authorities,
each having different powers and obligations. These are the
national Resolution Authority (RA), the national Competent
Authority (CA) and the European Banking Authority (EBA).
Certain powers are to be exercised on the initiative of either
the RA or the CA, while others (mostly in relation to
cross-border resolution planning) require joint decision-making
between the RA and EBA. The BRRD also requires member states to
designate a single ministry to exercise oversight of the RA, if
the RA is not the competent ministry. The new laws designate
the Central Bank of Cyprus as the national RA, the Central Bank
of Cyprus and the Cyprus Securities and Exchange Commission as
the CA for the entities they supervise (credit institutions and
investment firms respectively), and the Ministry of Finance as
the competent ministry.