Cyprus’ financial services landscape has changed markedly over the past decade, Governor of the Central Bank of Cyprus Christodoulos Patsalides said on Monday in his opening remarks at the 13th Banking, Payments and Fintech Forum and EXPO in Nicosia.
Noting that Cyprus domestic economy continues to perform robustly, he said that growth remains significantly above the euro area average at around 3.5%, supported by services, tourism, and professional activities, while public debt is on a downward trajectory, and labour market conditions remain favourable and close to full employment.
“The Cypriot banking sector stands as a pillar of resilience and an enabler of growth. The Common Equity Tier 1 (CET1) ratio is roughly ten percentage points above the euro area average, and liquidity ranks among the strongest in Europe” he stressed.
Moreover, the Governor said that in line with European trends, our financial services landscape has changed markedly over the past decade.
“Alongside traditional institutions, Cyprus now hosts a growing community of digital payment players, such as Electronic Money Institutions and Payment Institutions, although most of this business is conducted outside Cyprus”.
Referring to AI, he said that recent surveys indicate that more than 70% of financial institutions globally are already using, piloting, or exploring AI-based applications-from customer interaction and credit assessment to fraud detection, trading, and risk management.
“While these technologies offer significant efficiency gains and analytical power, their impact is profound: they challenge existing business models, introduce new operational and model risks, and increase dependencies on data and third-party providers” he noted.
Innovation, he continued, must be embraced, but always anchored in sound risk management, strong governance, and a clear commitment to financial stability.
“In a world defined by rapid technological transformation and heightened global risk, maintaining trust in money and in financial institutions is paramount. The Central Bank of Cyprus, as a member of the Eurosystem, remains fully committed to this objective-working with European partners to support a resilient, innovative, and inclusive financial system” the Governor underlined.
Referring to the European Central Bank’s Financial Stability Review of November 2025 he said it underscores that financial stability risks remain elevated, although broadly contained. Despite the challenges, he added, the European economy has demonstrated resilience and similarly, euro area banks have shown resilience to recent shocks amid strong profitability and ample capital and liquidity buffers.
The Governor noted that the European banking sector is undergoing profound transformation and that technology, is the primary driver of change.
“Digital banks are gaining market share, while innovation is revolutionising payments through the utilization of new technologies” he said, adding that within this evolving payments ecosystem, the introduction of the digital euro represents an important strategic response.
Europe’s digital currency, he went on to say, aims to preserve public access to central bank money in digital form, support Europe’s monetary sovereignty, enhance resilience in retail payments and foster innovation while maintaining high standards of privacy and security. Importantly, the digital euro is designed to complement, not replace, cash and private payment solutions.
“In this context, it is essential for the financial industry to remain well informed, to engage proactively, and to navigate effectively the changes ushered in by new technologies” the Governor concluded.