Climate risk threatens financial stability, Cyprus Central Bank warns

The Central Bank of Cyprus identified climate-related risks as a major threat to the nation's financial stability in its 2025 report. Extreme weather, including water scarcity, heatwaves, and wildfires, poses significant dangers to the agriculture and tourism sectors, which are vital to the local economy. These disruptions could ultimately devalue loan collateral and jeopardize the financial health of households and businesses. The bank cautions that long-term projections for the Eastern Mediterranean indicate a worsening climate trajectory, necessitating urgent attention to mitigate economic vulnerabilities.