YESTERDAY, the Cyprus Cabinet approved three draft bills concerning financial stability and the management of the financial crisis, in the light of developments in the Eurozone.
After the Cabinet meeting, government spokesman Stephanos Stephanou said that based on recent developments and in case of a financial crisis there should be immediate action to ensure financial stability.
He added that the three bills approved by the Council of Ministers offer the necessary institutional and legal framework enabling Cyprus to intervene and back the financial system, should the necessity arise.
The first bill will allow the government to step in and bolster a bank’s liquidity if required.
The second bill would create a fund to help stabilise the banking system.
The banks’ heavy exposure to Greek sovereign debt, estimated at some €4.2 billions and with a high risk of default, has been cited as a concern by credit ratings agencies which have downgraded the Island’s sovereign ratings in the past few months.
The third bill extends the existing special tax for credit institutions.
The three draft bills will require parliamentary approval.