Announcement of the Central Bank of Cyprus on the anniversary of the Turkish Invasion of Cyprus

Today marks the 50th anniversary of the Turkish invasion of Cyprus. The Central Bank of Cyprus (CBC) pays tribute to the deceased and fallen who sacrificed for our homeland. The ongoing illegal occupation of 40% of our country’s territory by Turkey highlights the blatant violation of International Law and the human rights of the Cypriot people by the occupying force.

Beyond the national consequences, the 1974 invasion had severe social and economic impacts. The violent displacement of 200,000 Greek Cypriots from their homes in the northern part of the island, where 70% of the country’s Gross National Product was produced, brought the economy to the brink of collapse. By the end of 1974, Cyprus appeared almost entirely devastated, with its survival in real jeopardy.

Faced with the threat of annihilation, all classes of the population collaborated. The entrepreneurial classes showed ingenuity and resourcefulness, the labour organizations demonstrated diligence and self-sacrifice, abandoning acquired rights and benefits, the displaced exhibited patience and endurance. Also, state officials proved worthy of the circumstances. The CBC played a significant role in managing the crisis and rebuilding the economy from the ruins.

Under its then-Governor, Mr. Chrysanthos Stefanis, the CBC, in coordination with the Ministry of Finance, pursued a highly expansionary monetary policy with the introduction of emergency measures to restart the economy. Specifically, the sharp rise in unemployment to 25%, the sudden drop in economic activity and incomes, and the inevitable impact on savings severely limited households' and businesses' ability to finance necessary expenses and investments.

The CBC, in collaboration with the government and the Ministry of Finance, played a crucial role in addressing these tragic conditions. Some of the most immediate and significant actions implemented were as follows:

• Facilitated the financing of housing needs for refugees and the replenishment of lost capital reserves and infrastructure.
• Provided the liquidity and support that banks needed to cope with asset losses in the occupied areas and to maintain their stability and reliability.
• Reduced the minimum required liquidity ratio and set maximum lending and deposit rates while simultaneously implementing government guarantee schemes in cases of insufficient security for loans.
• Ensured the maintenance of normality and confidence in the banking sector.
• In coordination with the government, consulted with international organisations such as the International Monetary Fund to secure, among other things, low-interest financing facilities for Cyprus.
• Established and operated the Special Fund for Financing Priority Projects under the responsibility of the CBC.

Today, the memory of those tragic conditions underscores the necessity for constant vigilance and ongoing efforts to further strengthen and protect our economy, and more importantly, to solve the Cyprus problem.