Greek Cypriot government, central bank row deepens

NICOSIA - Reuters

Greek Cyprus’ Finance Minister Harris Georgiades (C) and Central Bank of Cyprus Governor Panicos Demetriades sit with Holland’s Finance Minister. REUTERS photo

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

A rift between Governor Panicos Demetriades, appointed last May by the communist former administration, and the ruling centre-right government has deepened in recent days and pressure has grown on him to resign over his handling of the crisis.

In the past week, the Greek 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 ongoing saga drew a scathing response from European Central Bank (ECB) President Mario Draghi, who wrote to the Greek Cypriot president telling him any attempt to effectively sack the governor could land Greek Cyprus in the European Court of Justice.

“My intention to work with the country’s democratic institutions is a given,” Demetriades was quoted as saying in an interview with the Phileleftheros newspaper. “We are ready to respond to every call for cooperation and coordination 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.”

Under European Union law, a 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 Greek Cypriot lawmakers this week is seeking to find out whether Demetriades supplied enough information during an investigation into the demise of Greek Cyprus’s two biggest lenders, which left the economy in disarray.