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IMF assessment

After visits carried out earlier in the year to evaluate supervision in the financial sector, the International Monetary Fund recently published its Financial Sector Supervision Report for Cyprus. The supervision of commercial banks, cooperative credit institutions, the stock market and insurance companies is carried out by four distinct entities: the Central Bank of Cyprus, the Cooperative Societies' Supervision and Development Authority, the Securities and Exchange Commission, and the Superintendent of Insurance.

The IMF said that the supervision of insurance companies is constrained by resource limitations and recommended that further resources be made available. It also noted the progress being made in improving the supervision of cooperative banks and the stock market.

In the commercial banking sector, the IMF team concluded that supervision and regulation are strong and in full compliance with international standards.

Addressing the Sixth Interbalkan Forum of Banking Associations shortly afterwards, the governor of the Central Bank of Cyprus announced the issue of new guidance to banks operating in Cyprus in preparation for the new EU Capital Requirements Directive, which enters into force on January 1 2007. He told his audience that the Central Bank is confident that banks in Cyprus "are prepared and ready to face successfully the new risks as well as challenges posed by the new global competitive environment."

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