The Central Bank of Cyprus is considering activating the Systemic Risk Buffer as an additional safety net for the credit sector, in news that came as a shock to Cypriot banks and has divided public opinion.
At the 2026 annual general meeting of the Cyprus Bankers Association, the speech by Central Bank of Cyprus Governor Christodoulos Patsalides stood out. He indicated that the regulator is considering requiring Cypriot banks to hold additional capital buffers, with the ultimate goal of further strengthening financial stability.
On the same day, the International Monetary Fund, as part of its Article IV consultation for Cyprus, pointed out that the banking sector appears resilient, with solvency and liquidity indicators among the highest in the EU.
It noted that, following the increase of the countercyclical capital buffer from 1% to 1.5%, effective January 2026, Cyprus’ macroprudential policy to safeguard stability of the financial system is appropriately calibrated.
However, the IMF warned, “given that capital and liquidity buffers are already high, any further tightening of macroprudential policy should be carefully weighed against the potential impact on credit growth and financial deepening.”
