Paving the Way for Cyprus’ Inclusion in European Central Bank’s quantitative easing programme
Although Cyprus is currently excluded from the European Central Bank’s quantitative easing (QE) programme – an initiative set to see the
ECB purchase some €1.14 trillion in European public sector bonds – necessary measures are being taken to ensure that Cyprus’ may benefit from this development.
“Despite Cyprus’ exclusion, the conditions for the completion of the fifth
review are in place, following the submission of the fifth law of the insolvency
framework, something which would pave the way for the ECB to purchase Cypriot bonds from the secondary markets,” he told local media sources.
Indeed, the fifth and final bill of an insolvency framework was approved by the
Council of Ministers on Friday, March 6. Should the House of Representatives
offer their final approval of the bill and completed framework, the full
implementation of Cyprus’ foreclosures legislation is expected to follow. This
would secure Cyprus’ fulfillment of a key stipulation of its economic adjustment programme requirements and lead to the completion of its fifth review.
“A possible positive reaction by rating agencies after the completion of the fifth review is expected to lead to a further reduction of Cyprus’ borrowing costs, assisting the country’s bid to tap into the markets,” Yiasemides continued.
The board director noted, however, that despite the country’s best efforts,
ongoing fiscal and Governmental developments in regards to Greece’s economic adjustment programme could affect the entire euro area, including Cyprus.
“Although no decision is expected on the disbursement of any tranche to Greece, a possible agreement on a road map and a time frame on reforms that would secure the refinancing of Greece would affect markets positively,” he said.
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