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“No renewal of govt.’s deposits”, CB says

14/10/2009 09:35
The Central Bank of Cyprus decided to put an end to the renewal of the government’s short-term deposits. According to “Phileleftheros” newspaper, in a letter sent to Finance Minister, Charilaos Stavrakis, the Central Bank Governor asked the non-renewal of the government’s short term deposits of €2.1 billion.

According to the Governor, “it would be fair the Finance Ministry to stop the direct conduct of banking activities with the banks and to bring the older policy back”.

“The benefit of the banks after the issue of the new 3-year bonds of €3 billion will drop to €900 million instead of €3 million, if the government’s short-term deposits of €2.1 billion are withdrawn”, he said.

A year ago, the Finance Ministry selected the method of short-term deposits to boost the system’s liquidity.

“A possible withdrawal of €2.1 billion might be carried out at the end of the year for the coverage of the public sector’s needs and the refinancing of the public debt”, he concluded.