The aim of the new amendment to the Central Bank of Cyprus Law [138(I)/2002] is to accommodate specific recommendations of the European Systemic Risk Board (ESRB) on the macro-prudential mandate of national central banks in the framework of the oversight of the financial systems.
More specifically, under the new provisions, the Central Bank of Cyprus shall act as the authority responsible for safeguarding the stability of the Cyprus financial system as a whole, decreasing the build-up of systemic risks, thereby ensuring a sustainable contribution of the financial sector to economic growth. The powers and responsibilities of the Central Bank in the framework of macro-prudential oversight of the financial system shall include, inter alia:
• the tasks of identifying, monitoring and assessing risks to financial stability and of implementing policies to prevent and mitigate those risks;
• ensuring that the macro-prudential authority has control over appropriate instruments for achieving its objectives;
• entrusting the macro-prudential authority with the power to designate or develop the surveillance approaches, in cooperation with other competent public authorities in Cyprus, for identifying the financial institutions and structures that are systemically relevant for Cyprus;
• the cooperation, for purposes of exchanging information, between the Central Bank of Cyprus and the competent authorities of Cyprus or any other EU member state or the ESRB or the European Central Bank;
• ensuring that macro-prudential policy decisions and their motivations are made public in a timely manner, unless there are risks to financial stability in doing so, and that the macro-prudential policy strategies are set out and published by the macro-prudential authority;
• entrusting the macro-prudential authority with the power to make public and private statements on systemic risk.