The state has the obligation to step in and provide support to the banking system to ensure that it continues to operate and function smoothly, Finance Minister Kikis Kazamias has said, underscoring that the state intervention will be made not by choice but when necessary and upon the invitation of the competent supervising authority.

In statements to the press after the discussion of three new government Bills at the Parliamentary Committee on Financial and Budgetary Affairs on Tuesday, Kazamias said that the legislation will act as an added safeguard for financial institutions and would help boost the confidence placed of clients, partners and foreign investors.

Kazamias said that he stressed to MPs that “a state intervention will take place only after the private sector has taken all necessary action and will aim to ensure financial stability”.

He also clarified that any possible state intervention would only be made upon the request by Central Bank of Cyprus and only after a consultation with the competent supervising authority of the financial institution in question. The Central Bank of Cyprus is responsible for supervising banks whereas the Central Cooperative Bank supervises cooperative credit institutions.

“In such a case, the government should and is obligated to protect the rights and interests of the Cypriot taxpayer”, Kazamias stressed.

He further expressed the view that a spirit of mutual understanding and readiness for cooperation were evident during the discussion, which took place.

Kazamias reiterated that if the government was called upon to act, it would undertake its obligation and will be glad when its aid will no longer be necessary.