Competition in Cyprus’s banking sector “is limited, approaching oligopoly rather than perfect competition, and nothing can be done about it,” Central Bank Governor Christos Patsalides told parliament Thursday, adding that legislation does not permit the Central Bank of Cyprus (CBC) to supervise interest rates or bank charges.
“Cyprus is a small economy and it is normal for interest rate adjustments to be delayed,” Patsalides said, addressing the House Audit Committee, which was examining banking practices and their economic impact.
The committee session focused on “The level of lending and deposit interest rates and charges against customers of Licensed Credit Institutions and Credit Redemption Companies and Credit Facility Management Companies as restrictive factors for promoting development plans and/or investments in the Cypriot economy.”
The committee initiated the inquiry following a proposal by MPs Zacharias Koulias, Costas Costa, Christos Christofides, Alexandra Attalides, Alekos Tryfonides, and George Loukaidis.
Banking industry representatives have previously argued that interest rate adjustments reflect market realities and risk assessments rather than lack of competition. However, consumer advocates continue to express concerns about the impact of higher borrowing costs on households and businesses.
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