Sanctions against Russia will not have a significant impact on the Cypriot economy for now, Central Bank (CBC) governor Constantinos Herodotou said after meeting President Christodoulides on Friday.
“The sanctions so far will not have a significant impact at the level of the country’s economy,” Herodotou said, adding that he could not predict the impact of possible future sanctions on the economy.
Asked whether closing the accounts of Russian citizens in Cypriot banks would lead to capital outflows, the governor replied negatively, stressing that “our banks have very satisfactory capital levels and one of the best liquidity levels in the EU.”
Closing the accounts of some bank clients, he continued, “will have no effect on the bank, nor on other clients of the bank,” the governor said, noting what happens “will be the freezing of some bank accounts among the hundreds of thousands of bank accounts in our system.”
Closing a bank account is one thing and freezing it is another, Herodotou said, meaning that when an account is closed, the money is returned to the owner, whereas when it is frozen the money remains in the account but cannot be used.
He added that persons and entities under sanctions lose access to the money.
Asked whether there will be a new sanctions list affecting Cyprus from London and Washington, Herodotou said the Central Bank had no information.
“It is important to comply with both European and other relevant legislation,” he added.
The Central Bank “has always acted as an independent authority to enhance the stability and ownership of the banking sector and the country,” he noted, adding that the President told him “that this is an opportunity for our country to both show goodwill and improve the name of Cyprus.”
On April 12, Britain sanctioned two Cypriots, and the U.S. about a dozen Cypriots or dual-nationals for alleged ties to people or entities sanctioned over Russia’s invasion of Ukraine.
Bank of Cyprus, the island’s largest bank, said it had notified around 4,000 clients with Russian passports who were not resident in the EU that their accounts would be closed.
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