According to the latest Monetary Report of the Central Bank of Cyprus, the loans in foreign currency offered by the commercial banks have contributed to the increase in their share compared to the Cooperatives, which lost 1% to 25% against 26.3% in 2005. In August 2006, the loans in foreign currency stood at £2,189 billion, reaching 15% of the total borrowing in Cyprus. It is worth noting that the credits in foreign currency recorded an impressive increase of 51.9%.

Credit growth

The total credits allocated by the banks and the Cooperatives in January-August 2006 showed an increase of 13.2% to £14.6 billion against £12.9 billion in the corresponding period of 2005. The banks allocated 14.7% more loans than last year. Until August 2005, credits stood at £9.5 billion, while in January-August 2006 at 10.9 billion. On the other hand, the credit growth in the Coops reached 9.7%. In January-August 2006, the Coops granted £3.7 billion (in Cyprus pound only).

Risks

The Central Bank once again sounded the alarm for the lurking risks in borrowing in foreign currency. The CB stressed that this credit growth might evoke inflationary pressures on economy. Most loans are allotted in euros and some in Swiss francs.