FRANKFURT (MNI) – Negotiations between the Cypriot government; the
troika of the European Central Bank, the International Monetary Fund and
the European Commission; and other stakeholders on reforms to
consolidate public finances and boost competitiveness in Cyprus will
hopefully reach a successful conclusion by the end of next month, ECB
Governing Council member Panicos Demetriades said Tuesday.

“Our aim … is to bring the talks to a successful conclusion by
the end of October 2012,” Demetriades, who heads the Central Bank of
Cyprus, said, according to a speech text the CBC provided. “We will play
our part in the negotiations with the troika.”

In a speech geared mostly to highlight Cyprus’ appeal as an
international business centre, the Cypriot central banker also stressed
that the country would not miss its “opportunity” to restructure its
banking system as it uses assistance from the IMF and the European
bailout fund to recapitalize its banking system.

The current and proposed banking reforms were focused on a number
of goals, Demetriades explained, including strengthening corporate
governance and macro-prudential supervision, assessing risks to
financial stability and increasing financial system resilience.

“These are significant developments that will contribute not only
towards maintaining financial stability in Cyprus but also towards
restoring confidence and lowering the costs of doing business on the
island,” Demetriades said.

“I am therefore confident that the Cypriot banking system will
emerge substantially stronger from the current crisis and, as a result,
so will the country’s economy.”

Demetriades also stressed that investment opportunities in Cyprus
would not be hampered by the implementation of an economic adjustment
program via the European Stability Mechanism or the European Financial
Stability Facility.

“Instead, the EFSF/ESM programme should be regarded as a catalyst
that will reinforce macroeconomic and financial stability in Cyprus,
thereby further promoting the position of the island as an international
business and financial centre,” he said.

Turning to the ECB, Demetriades emphasized the Eurosystem’s
determination to safeguard the Eurozone from “market distortions which
threaten its viability.”

“In my few months on the ECB Governing Council, I have witnessed
increased determination by the ECB to safeguard the future of the
currency union,” Demetriades said.

The central banker also reiterated his view that an integrated
banking supervisory system was necessary for the Eurozone.

“In my view, every effort should be made to move ahead as quickly
as possible based on a phasing-in approach, as put forward in the
proposals, due to the urgency of the matter, especially as the set-up of
the [single supervisory mechanism] has been made a precondition for the
possible direct recapitalisation of banks by the ESM,” he added.

— Frankfurt bureau: +49 69 720 142; email: frankfurt@mni-news.com —

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