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Cyprus has an advanced economy among developed nations, according to the International Monetary Fund. The island nation is classified as high income and ranks as the 109th largest economy in the world when ranked by gross domestic product. The strength of the Cypriot economy relies mainly on their tourism industry but is supplemented by light manufacturing in addition to a large shipping industry. Its economy continues to rank highly in terms of quality of life as well as a desirable destination for tourists, with over half the Cypriot workforce laboring in the tourism industry. It is safe to say that Cyprus will remain mostly stable for the discernible future. This article will cover the financial system of Cyprus, as well as a range of market information covering currency, futures, and stocks.
The Cypriot financial system is centered around the Central Bank of Cyprus which is a publicly owned bank with many foreign investors. The supporting legs of their financial system are: financial intermediaries, financial markets, and market infrastructure. In short, they are institutions for those seeking credit, markets for investors to speculate gains, and the regulation and permittance of payments through clearing systems and regulation.
show moreThe Cyprus stock exchange is considered small in the wide world of financial markets. Despite its size, the exchange has grown extremely popular in recent history and trades a selection of highly valued assets on its exchange. Unfortunately, the global recession of 2009 devastated the Cyprus market, wiping out more than half of its value. Cyprus’ stock market has struggled to fully regain its previous strength despite an economic bailout from the EU and a strong tourism sector.
Cyprus has a regulatory body of note that governs their stock exchange as well as many brokers in the foreign exchange market or forex market. CYSEC, as it’s called, or the Cyprus Securities and Exchange Commission, is compliant with the European Union’s financial harmonization law. Although in the forex world, it is considered one of the loosest regulations for financial institutions.
Cyprus adopted the euro as its currency when joining the European Union in 2007. As such, it trades on the financial markets with the majorly popular European currency. The euro itself is the second most popular currency in the world and when traded against the American dollar (EUR/USD), serves as the most popularly traded pair on the market.
The euro is the adopted currency of 19 out of the 28 total countries in the European Union. As many of these countries are smaller than the welterweights of the world, the adoption of such a currency as their own empowers Cyprus and other small countries to build and sustain a strong economy, as well as strengthen their import and export businesses.
For much of its recent history, Cyprus has been under the control of the British Empire and thus circulated a currency cross called the Cypriot Pound – an extension of the Pound Sterling itself. After its independence from Britain, Cyprus was again attacked by the Turkish who occupied a small area of the territory and have for some years. More recently, Cyprus has joined the European Union and adopted its currency as of Spring 2008, with the exception being the Turkish-occupied northern territory where the Turkish Lira is still circulated.
The euro breaks down as follows:
There are seven denominations in euro banknotes. They are: €5, €10, €20, €50, €100, €200 and €500. Each banknote is distinguishable by its unique color and size which corresponds with higher denominations being larger.
Each euro can be further subdivided into 100 cents. There are eight euro coins which are: 1, 2, 5, 10, 20 and 50 cents, €1 and €2. The design on one side of the coins are common to all the countries of the Eurozone (the 19 out of 28 countries who use the euro as their currency), while the other side reflects the national identity of each of the issuing countries. All euro coins can be used in all Eurozone countries, irrespective of their national side.
The Cyprus Stock Exchange has the tone of a major growth market among a historically undervalued regional market. Cyprus is a rare frontier market where growth opportunities are backed by the developed regulations and stable currency of the significantly more stable economic environment of the European Union. In addition to the stability that the European Union provides, the Cyprus Exchange is also a member of the Federation of Euro-Asian Stock Exchanges. These validities together make investors feel more secure about risking their capital in an elusive but rewarding market.
The major sectors in the stock exchange are services, financial services, and the food & beverage industry. Most of these services are used at the behest of travelers who come to enjoy the natural beauty that Cyprus has to offer. It is safe to say that tourism is largely responsible for the success of these conglomerate services.
