The Central Bank of Cyprus (CBC) has reported a significant reduction in banking sector liquidity during 2024, reflecting the ongoing normalisation of monetary policy across the euro area.

According to the CBC’s Monetary Policy Implementation Report 2024, total liquidity in the Cypriot banking system fell to €19.2 billion by the end of the year, down from €23.7 billion in 2023. The decline was driven largely by the full repayment of targeted longer-term refinancing operations (TLTROs), which decreased by €4.5 billion, and a €1.2 billion reduction in monetary policy portfolios following lower reinvestments of maturing securities.

Despite this contraction, liquidity levels remained ample, enabling Cypriot banks to continue placing most of their excess reserves — €18.5 billion at year-end — in the central bank’s deposit facility to benefit from the positive deposit facility rate.

The CBC’s balance sheet shrank accordingly, dropping to €28.6 billion from €33.1 billion at the end of 2023. Intra-Eurosystem claims rose to €18.5 billion, becoming the largest asset component, while monetary policy portfolios declined to €6.5 billion.

Loans expanded from €25.3 billion to €27.6 billion, while deposits and cash equivalents contracted from €24.5 billion to €20.4 billion, reflecting the TLTRO repayments. Total banking sector liabilities edged down from €60.1 billion to €59.4 billion, primarily due to reduced deposits from households and non-financial corporations.

CNA/TNE/EPH/2025

ENDS, CYPRUS NEWS AGENCY