The role of the Central Bank of Cyprus
The role of the Central Bank of Cyprus (CBC) in the field of financial market infrastructures (FMIs) and payments is derived from the Central Bank of Cyprus Laws of 2002, as amended (CBC Laws) (only available in Greek), and is in line with the Treaty on the Functioning of the European Union (Treaty) and the Statute of the European System of Central Banks and of the European Central Bank (Statute).
The CBC has a role in its capacity as:
(a) Operator of FMIs;
(b) Oversight Authority;
(c) Catalyst for market-led change, and
(d) Banker and representative of the Republic of Cyprus for financial matters.
The Treaty and the Statute
One of the basic tasks to be carried out through the European System of Central Banks (ESCB) shall be ‘to promote the smooth operation of payment systems’ (Article 127(2) of the Treaty, as mirrored in Article 3.1 of the Statute). For performing this task, ‘the ECB and the national central banks may provide facilities, and the ECB may make regulations, to ensure efficient and sound clearing and payments systems within the Union and with other countries” (Article 22 of the Statute).
One of the main tasks of the CBC is ‘the promotion, regulation and oversight of the smooth operation of the payment, clearing and/or settlement systems’ (Article 6(2)(g)).
Article 48 elaborates further and empowers the CBC to: (i) manage, participate in, or become a member of any payment, clearing and/or settlement system, (ii) place under its oversight such systems operating in the Republic of Cyprus, (iii) issue directives regulating the functions and the operating procedure of the systems under its oversight, (iv) suspend the operation of any of those systems, (v) impose administrative fines and (vi) take judicial measures for non-compliance.
Moreover, the CBC acts as a banker and representative of the Republic of Cyprus for financial matters (Articles 50-51).