Nicosia, Cyprus. The Central Bank of Cyprus on Tuesday published its 2025 Financial Stability Report, saying that Cyprus’ financial system remains resilient despite elevated geopolitical tensions, global uncertainty and emerging risks.
The report found that risks to financial stability remain elevated, while the Cypriot economy and domestic financial sector have continued to demonstrate resilience.
Assessment of risks
The annual report assesses developments and risks affecting financial stability in Cyprus. It focuses on key medium-term risks facing the financial system, the sector’s resilience under adverse scenarios and macroprudential measures adopted by the CBC.
The report takes a forward-looking approach intended to identify and assess potential risks early through severe but plausible scenarios. The CBC said these exercises do not imply that crises are expected.
The central bank said its analysis and conclusions were presented in a balanced, prudent and evidence-based manner, which it described as particularly important amid heightened international uncertainty, rapid economic developments and growing geopolitical challenges.
Capital and liquidity
In a message accompanying the report, Pany Karamanou, head of the CBC’s Financial Stability and Resolution Directorate, said geopolitical and economic tensions, together with elevated global uncertainty, were shaping the outlook for financial stability.
She said maintaining strong capital positions and adequate liquidity buffers remained essential to ensuring the resilience of the financial sector.
Karamanou also said the systematic incorporation of geopolitical, macroeconomic, climate-related and cyber risks into strategic decision-making, alongside stronger corporate governance, was a key prerequisite for safeguarding financial stability.
Economic resilience
According to the report, the Cypriot economy and domestic financial system continued to show significant resilience despite an exceptionally uncertain international environment and heightened geopolitical tensions.
The CBC said economic activity remained strong, public finances continued to improve and Cyprus maintained its creditworthiness, confirming the positive trajectory of the country’s economy in recent years.