Cyprus’ Banks are expected to try to raise capital privately to strengthen their capital adequacy, Finance Minister Kikis Kazamias has said, stressing however that the Government is ready to step in and take all actions necessary to ensure financial stability.

In a written statement issued Wednesday, Kazamias noted that the whole banking system at EU level is facing serious challenges arising mainly from the debt crisis in the eurozone.

He said that “an effort is being undertaken at EU level to further increase the capital adequacy of the EU banking system so as to be able to cope with further shocks from the debt crisis.“

Therefore, he added, “increasing European banks’ capital aims at maintaining the necessary capital in the banking system at very high levels following any significant assessment of the value of government bonds held by banks in order to maintain a climate of trust in the system.“

Minister stressed that “in this context, as is already known, the Cypriot banks are exposed to government bonds and so are facing the same challenge.“

The entire issue, he added, is being addressed with all due consideration by both the Ministry of Finance and Central Bank of Cyprus.“

Kazamias stresses that “the required additional strengthening of the capital adequacy of Cypriot banks should be done primarily by the banks themselves.“

“However, if necessary, the Government in close collaboration with the Central Bank is prepared to take all necessary actions to ensure financial stability,“ he added.

Finally, Kazamias noted that the issue of effective response to the challenge of further strengthening the capital adequacy of European banks is being handled at European level, with the possible involvement of the European Financial Stability Fund