April 28, 2012 - 16:20 AMT
PanARMENIAN.Net - A British university's financial economics professor was appointed Cyprus' new Central Bank governor Saturday, April 28, as the eurozone member struggles to contain a stagnating economy and banking system roiling under heavy exposure to Greek debt, AP reports.
Government spokesman Stefanos Stefanou said President Dimitris Christofias wished Panicos Demetriades every success in the "difficult task" of helping to return the eurozone member's beleaguered banking system to solid ground.
The 53-year-old Demetriades, who gained a Ph.D. in Economics at Cambridge University, faces a daunting task amid fears that the island's major banks, which are trying to cope with record losses due to Greek exposure, may need to be bailed out.
Cyprus' bank woes have been primarily responsible for the country's credit rating being reduced to junk by two of the three major international ratings agencies and leaving it unable to borrow from international markets because of the prohibitively high interest rates. The island is relying on a low-interest, €4.5 billion ($5.95 billion) Russian loan to get by this year and has promised to stick to a deficit target of 2.5 percent of gross domestic product.
Finance Minister Vassos Shiarly has said the government is ready to step in and prop up the banks if they can't raise an estimated €1.5 billion ($1.97 billion) on their own to meet recapitalization targets. His ministry has already drawn up contingency plans for such a move.
Fitch credit ratings agency - the sole agency to keep Cyprus' rating at a step above junk - said Friday that raising private capital will prove difficult, and Cypriot banks - especially Cyprus Popular Bank - may need government or international support.