Nicosia: The Central Bank of Cyprus (CBC) has reported a reduction in banking sector liquidity during 2024, reflecting the ongoing normalisation of monetary policy across the euro area.
According to Cyprus News Agency, the CBC’s Monetary Policy Implementation Report 2024 highlighted that 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. This decline was driven primarily by the full repayment of targeted longer-term refinancing operations (TLTROs), which decreased by £4.5 billion, along with a £1.2 billion reduction in monetary policy portfolios due to lower reinvestments of maturing securities.
Despite the contraction, liquidity levels remained sufficient, allowing 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 experienced a reduction, falling to £28.6 billion from £33.1 billion at the end of 2023. Intra-Eurosystem claims increased to £18.5 billion, becoming the largest asset component, while monetary policy portfolios decreased to £6.5 billion.
In addition, loans grew from £25.3 billion to £27.6 billion, whereas deposits and cash equivalents reduced from £24.5 billion to £20.4 billion, reflecting the impact of TLTRO repayments. Overall, total banking sector liabilities slightly decreased from £60.1 billion to £59.4 billion, primarily due to reduced deposits from households and non-financial corporations.