23/04/2013 09:00
Central Bank Governor will have a meeting with the banks tomorrow to discus the circular that will be sent during the day for a deposit rate cut.
The Portuguese-type intervention of Panicos Demetriades aims to push down borrowing costs for households and businesses.
Using the example of Portugal, the Cypriot supervisory authority will try to set a limit on deposit rates.
The CB is considering taking actions that would raise the ceiling on deposit rates close to 3.50%, which is close to 125 basis points below the rates in force prior to the imposition of restrictions.
Similar actions were made through circulars by the Cooperatives.
The arrangement to be discussed tomorrow by the CB and the banks will be based on a formula that will ask banks more funds for interest rates exceeding the maximum interest rate limit to be decided.
In November 2011, the central bank of Portugal imposed a penalty on deposit accounts receiving rates beyond 300 basis points over euribor. In April 2012 the measure changed so that the penalty changes according to the duration of the deposit, encouraging longer-term deposits.
According to the fourth assessment report of the Portuguese program, the measure cut interest rates by 100 basis points without having direct impact on lending rates.
Latest figures for Portugal show that its deposit rates declined from 4.57% in October 2011 to 2.47% in February 2013.
Lending rates for mortgages in Portugal decreased from 5.25% in October 2011 to 4.27% in February 2013.
In Cyprus, deposit rates in February 2013 were at 4.52% and mortgage rates at 5.43%.
Businesses borrow in Cyprus with an average interest rate of 6.57% and Portugal with 4.49%.
As known, Cyprus has one of the highest deposit rates in the eurozone. The high interest rates were one of the main reasons of inflow of foreign deposits on the island.
The Portuguese-type intervention of Panicos Demetriades aims to push down borrowing costs for households and businesses.
Using the example of Portugal, the Cypriot supervisory authority will try to set a limit on deposit rates.
The CB is considering taking actions that would raise the ceiling on deposit rates close to 3.50%, which is close to 125 basis points below the rates in force prior to the imposition of restrictions.
Similar actions were made through circulars by the Cooperatives.
The arrangement to be discussed tomorrow by the CB and the banks will be based on a formula that will ask banks more funds for interest rates exceeding the maximum interest rate limit to be decided.
In November 2011, the central bank of Portugal imposed a penalty on deposit accounts receiving rates beyond 300 basis points over euribor. In April 2012 the measure changed so that the penalty changes according to the duration of the deposit, encouraging longer-term deposits.
According to the fourth assessment report of the Portuguese program, the measure cut interest rates by 100 basis points without having direct impact on lending rates.Latest figures for Portugal show that its deposit rates declined from 4.57% in October 2011 to 2.47% in February 2013.
Lending rates for mortgages in Portugal decreased from 5.25% in October 2011 to 4.27% in February 2013.
In Cyprus, deposit rates in February 2013 were at 4.52% and mortgage rates at 5.43%.
Businesses borrow in Cyprus with an average interest rate of 6.57% and Portugal with 4.49%.
As known, Cyprus has one of the highest deposit rates in the eurozone. The high interest rates were one of the main reasons of inflow of foreign deposits on the island.
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