Nicosia: George Theocharides, Chairman of Cyprus Securities and Exchange Commission (CySEC), emphasized the necessity for further European integration during the Economist 20th Annual Cyprus Summit. He highlighted that establishing a Capital Markets Union would greatly facilitate investors in funding European companies, thereby enhancing their competitiveness on a global scale.
According to Cyprus News Agency, Theocharides addressed the impact of geopolitical tensions, which have increased risk aversion among consumers and investors. This shift has driven investors away from risky assets toward safer options like the US dollar, gold, and U.S. Treasury bonds, resulting in a weakened euro against the dollar. He also noted that the dollar’s strength is bolstered by anticipated pro-inflationary policies from the Trump administration, while fears of potential U.S. trade tariffs threaten European growth.
Theocharides reiterated the need for a Capital Markets Union, a concept first proposed in 2014, stating that s
tronger capital markets are essential for financing European companies to compete with regions such as the United States and China. He stressed the importance of financing innovation, reforming financial institutions, ensuring market transparency, enhancing corporate governance, and investing in the green transition.
Wim Van Aken, European Stability Mechanism mission chief for Cyprus, added that Cyprus is more susceptible to external shocks and geopolitical tensions due to its size and geographical location. He pointed out the significant impact of Russian sanctions on Cyprus and emphasized the need for European integration in the single market to address these challenges. Van Aken also highlighted the importance of both a Banking Union and a Capital Markets Union as vital sources of financing.
Van Aken praised Cyprus for its strong economic performance and favorable projections, noting that the country could reach a 60% debt-to-GDP ratio by 2026, an achievement that seemed unlikely a decade ago. Despite th
is positive outlook, he warned that Cyprus remains vulnerable and urged the continuation of reform efforts to tackle these vulnerabilities and leverage the benefits of European integration. He emphasized the need to accelerate the green and digital transition under the Recovery and Resilience Plan, with Cyprus having made significant progress but still having two years to maximize the plan’s benefits.
Additionally, Van Aken recommended further diversification of Cyprus’ economy to increase its resilience against geoeconomic fragmentation. He cited efforts in diversifying the tourism sector, enhancing the ICT sector, promoting greener energy solutions, and internationalizing higher education and healthcare services as examples of current diversification initiatives.