Cypriot bank chief: Respect our independence

Cyprus’s central bank governor has said he is willing to work with the country’s government to pull the island out of its economic crisis, provided the bank’s independence is respected.

A rift between governor Panicos Demetriades, appointed last May by the communist former administration, and Cyprus’ ruling centre-right government has deepened in recent days, with pressure growing for him to resign over his handling of the crisis.

In the past week, the Cypriot parliament started an investigation against Demetriades, president Nicos Anastasiades’s government withdrew the appointment of his deputy, and three central bank officials resigned.

The saga drew a scathing response from ECB president Mario Draghi, who wrote to Anastasiades, telling him that any attempt to effectively sack the governor could land Cyprus in the European Court of Justice.

“My intention to work with the country’s democratic institutions is a given,” said Demetriades yesterday.

“We are ready to respond to every call for co-operation and co-ordination for the benefit of this country always, however within the framework of total respect towards the central bank’s independence, as stipulated by the ECB,” he added.

Under EU law, a central bank governor can only be dismissed if he no longer fulfils the conditions required for the performance of his duties, or if he is guilty of serious misconduct.

The investigation launched by Cypriot lawmakers last week is seeking to find out whether Demetriades supplied enough information during an investigation into the demise of Cyprus’s two biggest lenders, which left the economy in disarray.

The collapse of the country’s banking system imposed massive losses on depositors in order to qualify for a €10bn bailout by the EU and IMF.

The departures from the regulator’s board in the past week have slimmed the six-member board to two, including Demetriades.

The government, in power for two months, has sought to play down accusations it was intervening with the central bank’s duties.

Government spokesman Christos Stylianides said authorities demanded Demetriades take back comments he made on the sidelines of the Dublin Eurogroup meeting that the central bank’s independence was under attack.