Central Bank of Cyprus releases 2025 financial stability report

The Central Bank of Cyprus (CBC) published its annual Financial Stability Report for 2025 on July 28, 2026. The document highlights the need for maintaining strong capital and liquidity buffers within the financial sector amidst ongoing international uncertainty and geopolitical tensions.

While the report acknowledges the significant resilience of the Cypriot economy and banking sector—citing strong economic activity, improved public finances, and sustained credit credibility—it identifies several key medium-term risks. These include geopolitical instability stemming from intensified military conflicts, global debt concerns, abrupt repricing in financial markets, risks associated with the real estate market, climate change threats, and cybersecurity vulnerabilities.

Adopting a proactive approach, the CBC utilizes this report to identify and evaluate potential risks through stress tests using extreme yet plausible scenarios. This analytical framework is designed to safeguard the stability of the system rather than predict imminent crises. The central bank emphasizes that despite the observed resilience, continued vigilance remains essential given the volatile global environment.