Effective co-operation and frequent exchanges of information among the competent authorities are essential in maintaining financial stability both in normal times and in times of crisis.
The Central Bank of Cyprus chairs the National Financial Stability Committee, whose task is to discuss financial stability, including crisis management, issues at a domestic level. The Committee was set up in accordance with the provisions of the Memorandum of Understanding between the Central Bank of Cyprus, the Cyprus Securities and Exchange Commission, the Insurance Companies Control Service and the Ministry of Finance in the field of financial stability signed in November 2007. The Memorandum, inter alia, provides for the exchange of information among the competent authorities.
The Central Bank of Cyprus participates in the Advisory Technical Committee (ATC) of the European Systemic Risk Board (ESRB) and its sub-structures. The ATC provides advice and assistance on issues relevant to the work of the ESRB. It contributes to, inter alia, the regular review of financial stability conditions in the European Union, including the detection of systemic risks, the analytical and policy preparations for discussions in the ESRB Steering Committee and the General Board on warnings and recommendations, the review and possible development of macroprudential policy instruments available to competent authorities of the Member states, the regular monitoring of the macroprudential policy decisions taken by the competent authorities of the Member States as well as outside the European Union and the discussion of their possible implications for the European Union as a whole.
The Central Bank of Cyprus also participates in the Financial Stability Committee (FSC) of the European System of Central Banks (ESCB) and its sub-structures. The FSC assists the decision making bodies of the European Central Bank in the fulfilment of its tasks in the field of prudential supervision of credit institutions and the stability of the financial system. It contributes to, inter alia, the analysis of financial stability issues relating to the euro area, the review of analytical tools to support systemic risk analysis at the euro area level, the analysis of policy issues in the field of financial regulation, supervision and crisis management in the European Union and internationally, the assessment of the impact of regulatory and supervisory requirements on the stability of the euro area financial system as well as the promotion of financial stability arrangements at the euro area and European Union levels.
Moreover, the Central Bank of Cyprus participates in the Financial Stability Table (FST) of the Economic and Financial Committee (EFC) of the European Union, which reviews financial stability issues semi-annually. The EFC-FST is responsible for preparing the ECOFIN Council’s discussions on financial stability matters.
The Central Bank of Cyprus is also a signatory to the Memorandum of Understanding on Co-operation between the Financial Supervisory Authorities, Central Banks and Finance Ministries of the European Union on Cross-border Financial Stability of 1 June 2008. The objective of the Memorandum is to ensure co-operation in financial crises between the aforementioned authorities through appropriate procedures for the exchange of information and assessments, in order to facilitate the pursuance of their respective policy functions and to preserve stability of the financial system of individual Member States and of the European Union as a whole.