On January 1st 2008, the Republic of Cyprus joined the euro system and in doing so the euro was introduced as its official currency, replacing the Cyprus pound as the unit of account. Thus, euro banknotes and coins are the country’s legal tender.

The euro is subdivided into 100 cent. There are currently in circulation seven denominations of euro banknotes (€500, €200, €100, €50, €20, €10 and €5) and eight denominations of coins (€2, €1, 50, 20, 10, 5, 2 and 1 cent). The euro banknotes are exactly the same in all euro area countries. The euro coins have a side which is common for all euro area countries and a national side which shows country-specific designs. As with banknotes, euro coins can circulate in all euro area countries irrespective of the issuing country. Cyprus has a well-developed and modern banking system, which offers a wide range of services catering for the needs of businesses and individuals. Cyprus’ banking system comprises the Central Bank of Cyprus and banking institutions, which operate as fully-fledged commercial banks. It also encompasses the co-operative credit institutions, the main activities of which are the collection of savings and the extension of loans to their members. The latter are supervised by the Co-operative Societies Supervision and Development Authority. The banking system in Cyprus is well organized and meets the highest international banking standards. As such it copes completely and efficiently with the diversified needs of the business community. The Central Bank of Cyprus supervises banks which are incorporated in Cyprus, including local subsidiaries of foreign banks, branches of foreign banks as well as representative offices of foreign banks. As at the end of 2011, 14 locally incorporated banks were operating in Cyprus, seven of which were subsidiaries of foreign banks. In addition, there were 26 branches of foreign banks and two representative offices of foreign banks.

Banking arrangements and practices follow the British model. Banks maintain strong correspondent networks around the world and most of them subscribe to SWIFT, Reuters, Telerate and other services, enabling them to have easy access to the world-banking network. They offer a wide range of services including insurance, leasing, hire purchase finance, factoring, mutual fund management, and investment and consulting as well as custody and asset management services.

Banks are sound and well capitalized. They have responded to the demands of the liberalized financial environment in which they have been operating in recent years by making efforts to expand their sources of income as well as to streamline their operations and cut costs. Moreover, they have made significant investments in the field of technology and computerized systems, which increase productivity as well as in skilled human resources. Special emphasis has also been given to the strengthening of internal governance and improvement of their risk management systems and policies.

Cypriots and foreigners residing on the island enjoy the benefits of a well developed insurance

Industry with all types of risk accepted mainly through agents and intermediaries. Currently (2012) there are 26 local insurance companies operating on the island, 6 international insurance undertakings, 5 European insurance undertakings operating in the Republic of Cyprus under the freedom of establishment, 394 insurance undertakings operating in the Republic of Cyprus under the regime of freedom to provide services and 2 foreign insurance undertakings. The Cyprus Stock Exchange commenced its operations in March 1996. It is a regulated exchange where all transactions concerning corporate and public securities are carried out. Such securities include stocks, bonds and warrants. The main participants in the market are the members of the stock exchange (stock brokerage firms), the listed issuers and the investors. Transactions are electronically displayed and the trading and settlement systems are computerized.