Chapter

CYPRUS

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2000
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Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: January 9, 1991.
Exchange Arrangement
CurrencyThe currency of Cyprus is the Cyprus pound.
Exchange rate structureUnitary.
Classification
Pegged exchange rate within horizontal bandsThe Cyprus pound is pegged to the euro at a central rate of €1.7086 per £C 1, with margins of 2.25% around the euro central rate. Subject to certain limitations, including a limit on spreads between buying and selling rates, authorized dealers (banks) are free to determine and quote their own buying and selling rates. The Central Bank of Cyprus (CBC) also quotes daily buying and selling rates for the dollar, the euro, the Greek drachma, and the pound sterling. These rates are subject to change throughout the day. It also quotes indicative rates for other foreign currencies on the basis of market rates in international money market centers.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketAuthorized dealers may trade in the forward market at rates freely negotiated with their customers. For dollars and pounds sterling, however, forward margins may not be larger than those applied by the CBC for cover for a similar period. Authorized dealers are allowed to purchase forward cover from the CBC at prevailing rates or to conduct forward operations between two foreign currencies for cover in one of the two currencies.
Official cover of forward operationsThe CBC offers authorized dealers facilities for forward purchases of dollars and pounds sterling for exports for periods of up to 24 months and for imports normally for up to nine months.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payment arrangementsNo.
Administration of controlExchange controls are administered by the CBC in cooperation with authorized dealers to whom authority has been delegated to approve applications for the allocation of foreign exchange for a large number of bona fide transactions.
International security restrictions
In accordance with Executive Board Decision No. 144-(52/51)Although restrictions imposed against the Federal Republic of Yugoslavia (Serbia/Monte-negro) were lifted, bank balances belonging to the National Bank of Yugoslavia remain frozen.
In accordance with UN sanctionsEconomic sanctions against Iraq, Sierra Leone, and the UNITA movement in Angola pursuant to UN Security Council resolutions are administered by the CBC and relevant government departments. On July 28, 1999, restrictions imposed against Libya were suspended.
Payment arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeResidents may hold and acquire gold coins in Cyprus for numismatic collection purposes. Residents other than the monetary authorities, authorized dealers in gold, and industrial users are not allowed to hold or acquire gold bullion at home or abroad.
Controls on external tradeThe exportation of gold coins or bullion requires the permission of the CBC. Authorized dealers in gold are permitted to import gold bullion only for the purpose of disposing of it to industrial users.
Controls on exports and imports of banknotes
On exports
Domestic currencyResident travelers may take out up to £C 100. Nonresident travelers may take out any amount of Cypriot banknotes that they imported and declared on arrival. In the case of failure to declare the banknotes imported on arrival, nonresidents may export up to the equivalent of $1,000 in Cypriot or foreign banknotes.



Authorized dealers may dispatch any amount of Cypriot banknotes to foreign banks in exchange for foreign currency.
Foreign currencyResident travelers may take out any amount of foreign banknotes purchased from authorized dealers as part of their foreign currency allowances. Nonresident travelers may take out any amount of foreign banknotes that they imported and declared on arrival, as well as any amount purchased from banks in Cyprus against external funds. In addition, departing nonresidents may convert, through authorized dealers, Cypriot banknotes up to £C 500 into foreign banknotes, which they can export.
On imports
Foreign currencyNonresidents entering Cyprus are advised to declare to customs any Cypriot or foreign banknotes in order to facilitate their reexport, deposit with authorized dealers, or use in purchasing immovable property or goods for export.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyResidents dealing with transit or triangular trade may deposit up to 97.5% of sale proceeds in these accounts and use balances to pay for the cost of traded goods. Residents engaged in manufacturer-exporter activities may deposit up to 50% of export proceeds in these accounts and use balances to pay for imports of raw materials used in production. Both transit traders and manufacturers-exporters are, however, required to convert into Cyprus pounds at the end of each year any balances in excess of the amount that is necessary for payments of traded goods or raw materials during the following three months. Resident hoteliers may deposit in such accounts part of their receipts in foreign currency that they need to make imminent installment payments on foreign currency loans. Resident lawyers, accountants, and stockbrokers who handle funds of their nonresident clients may also maintain foreign currency accounts or external accounts with authorized dealers. However, approval of the CBC is required for residents other than those referred to above and below.
Held abroadCypriot repatriates may keep in foreign currency accounts external accounts with banks in Cyprus, or accounts with banks abroad all of their foreign currency holdings and earnings accruing from properties they own abroad. Resident individuals temporarily working abroad may maintain their foreign currency earnings in foreign currency accounts, external accounts with banks in Cyprus, or accounts with banks abroad. However, approval of the CBC is required for residents other than those referred to in the preceding paragraph. Such approval, however, is granted only in exceptional circumstances.
Accounts in domestic currency convertible into foreign currencyThese accounts are designated as external accounts.
Nonresident Accounts
Foreign exchange accounts permittedNonresidents may open and maintain accounts with authorized dealers, which may be credited freely with payments from nonresidents (such as transfers from other external accounts or foreign currency accounts), with proceeds from sales of any foreign currency by nonresidents (including declared banknotes), and with authorized payments from residents. Nonresidents who are temporarily employed in Cyprus by residents are allowed to deposit in external or foreign exchange accounts with authorized dealers their entire wages in cases where the terms of employment provides for room and board, or in other cases up to 80% of their monthly wages or £C 400 monthly, whichever is higher, without CBC approval.



The accounts may be debited for payments to residents and nonresidents, for remittances abroad, for transfers to other external accounts or foreign currency accounts, and for payments in cash (Cyprus pounds) in Cyprus. Companies registered or incorporated in Cyprus that are accorded nonresident status (generally designated as international business companies) by the CBC as well as their nonresident employees may maintain foreign currency accounts in Cyprus or abroad, as well as local disbursement accounts for meeting their payments in Cyprus.
Domestic currency accountsYes.
Convertible into foreign currencyThese accounts are designated as external accounts, and the same regulations as for foreign currency accounts apply.
Blocked accountsBlocked accounts are maintained in the name of nonresidents for funds that may not immediately be transferred outside of Cyprus. Blocked funds may either be held as deposits or be invested in government securities or government-guaranteed securities. Income earned on blocked funds is freely transferable to the nonresident beneficiary or may be credited to an external account or foreign currency account.



In addition to income, up to one-third of the principal or £C 50,000, whichever is higher, may be released for transfer abroad in each calendar year. Thus, blocked accounts are now in practice transferable abroad within two years after the date of blocking. Also, blocked funds may be released for the following payments in Cyprus: (1) to meet the holder’s personal expenses in Cyprus (up to £C 10,000 a year without reference to the CBC); and (2) to purchase any securities quoted on the Cyprus Stock Exchange.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsYes.
Advance payment requirementsPrior approval of the CBC is required for remittances to suppliers exceeding £C 50,000. Authorized dealers are allowed to sell to departing residents foreign exchange up to £C 20,000 for purchases and for the importation of goods into Cyprus; for larger amounts, approval by the CBC is required.
Documentation requirements for release of foreign exchange for imports
Import licenses used as exchange licensesImport licenses are required for a small number of commodities.
Import licenses and other nontariff measuresMost imports are free of licensing requirements. A license is required for a small number of commodities prescribed by the Minister of Commerce, Industry, and Tourism (MCIT).



Nonresidents may not import commodities into Cyprus unless they are granted a special import license by the MCIT. The importation of goods such as motor vehicles to be used temporarily by visitors or goods to be exhibited in Cyprus and reexported is not subject to this requirement. Imports from Iraq are restricted in accordance with UN Security Council resolutions.
Negative listYes.
Import taxes and/or tariffsYes.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsAll exports whose value exceeds £C 10,000 are subject to exchange control monitoring to ensure the repatriation of the export proceeds.
Surrender requirementsIn general, export proceeds must be surrendered to authorized dealers not later than six months after the date of exportation. However, manufacturers are required to convert into domestic currency only 50% of export proceeds; they may deposit the remaining 50% in foreign currency accounts with authorized dealers.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesNo.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersAuthorized dealers have been delegated the authority to carry out payments for most invisible transactions without reference to the CBC. Invisible transactions that have not been delegated to authorized dealers are still subject to prior approval by the CBC in order to verify the genuineness of each transaction.
Trade-related paymentsAuthorized dealers may carry out payments for freight, without prior approval of the CBC. However, if the payment exceeds £C 5,000, documentary evidence must be subsequently submitted to the CBC. Until November 28, 1999, the CBC approved applications for the remittance of insurance premiums owed to foreign insurance companies. Effective November 29, 1999, authorized dealers may carry out payments for insurance without reference to the CBC.
Prior approvalCommissions in excess of 5% of the value of exported goods require CBC approval.
Indicative limits/bona fide testThere are indicative limits for the payment of commissions.
Investment-related paymentsProfits and dividends and interest from approved foreign investments may be transferred abroad without limitation after payment of due taxes.
Prior approvalYes.
Payments for travel
Quantitative limitsAuthorized dealers are allowed, without reference to the CBC, to sell to resident travelers foreign exchange up to £C 1,000 a person a trip for tourist travel. Moreover, payments for travel may be made through credit cards issued by authorized dealers. The allowance for business travel is £C 150 a day with a maximum of £C 1,500 a trip, or £C 80 a day with a maximum of £C 800 a trip if the traveler holds an international business credit card. Authorized dealers may approve, without reference to the CBC, applications by resident travel agents to pay foreign travel agents and hotels up to £C 10,000 for each organized trip.
Indicative limits/bona fide testThe CBC approves applications for higher amounts to cover bona fide expenses without limitation.
Personal payments
Prior approvalPrior approval is required for the transfer of pensions and for other personal payment exceeding the quantitative or indicative limits.
Quantitative limitsFor studies abroad, exchange allowances are based on the cost of living, which is reviewed yearly. The current annual allowance for living expenses for studies in western European countries, except Greece, is £C 7,800; for North America, £C 9,000; for Australia, £C 5,000; and for Greece and all other countries, £C 4,600. There is no limit on the remittance of foreign exchange for payment of tuition fees and greater amounts may be allowed with the approval of the CBC.
Indicative limits/bona fide testThe indicative limit is £C 5,000 for medical expenses abroad. Unlimited additional amounts are provided with the approval of the CBC. For family maintenance and alimony payment, the indicative limit is £C 500 every six months.
Foreign workers’ wages
Quantitative limitsNonresidents who are temporarily employed in Cyprus by resident firms or individuals and are paid in local currency may deposit with authorized dealers their entire wages in cases where the terms of employment provides for room and board, or in other cases, up to 80% of their monthly remuneration or £C 400 monthly, whichever is higher, in external or foreign currency accounts. The balances in these accounts may be freely transferred abroad without reference to the CBC. For deposits or transfers of amounts in excess of the limits, approval of the CBC is required.
Indicative limits/bona fide testYes.
Credit card use abroadThrough December 23, 1999, when the CBC abolished restrictions on the use of credit cards for current payments abroad, authorized dealers were allowed to issue credit cards valid abroad to any resident, except for residents studying abroad or temporarily living abroad. These cards, which were designated as international personal cards, were used abroad for payments to hotels and restaurants; transportation expenses; doctors, clinics, or hospitals; international telephone calls; cash withdrawals up to £C 100 a trip; and any other payments of a total value not exceeding £C 300 a trip. In addition, international personal cards could be used for payments abroad or from Cyprus up to £C 300 for each transaction for the following purposes: examination fees, application fees for admission to foreign educational institutions, subscriptions to professional bodies or societies, fees for enrollment in professional or educational seminars or conferences, and hotel reservation fees. International personal cards were also used for mail orders of books up to £C 300. Authorized dealers now issue credit cards valid abroad to any resident.
Quantitative limitsFor cash withdrawals, the limit is £C 300 a trip.
Other paymentsAuthorized dealers may carry out payments for subscription to professional bodies or societies up to £C 300 a transaction, without reference to the CBC. Prior approval of the CBC is required for amounts exceeding £C 300. Effective March 24, 1999, authorized dealers are empowered to approve payments for royalties and license fees as well as for specialized services in accordance with relevant agreements, without reference to the CBC.
Prior approvalYes.
Quantitative limitsYes.
Indicative limits/bona fide testYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Surrender requirementsGenerally, receipts from invisibles must be sold to an authorized dealer. However, a large number of residents have been allowed to maintain part of these proceeds in foreign currency accounts and use these balances for international current payments.
Restrictions on use of fundsYes.
Capital Transactions
Controls on capital and money market instruments
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsEffective July 23, 1999, the acquisition of shares of banks listed in the Cyprus Stock Exchange (CSE) is subject to a ceiling of 50% of each bank’s listed capital.



Effective January 7, 2000, the acquisition of shares of other public companies, except banks, by citizens of EU member states is free, while the acquisition of such shares by citizens of non-EU countries continues to be subject to the 49% limit.



Public companies and stockbrokers are authorized to carry out the relevant transactions with nonresidents without reference to the CBC, subject to the limits described above. Applications over these limits may be approved by the CBC.
Sale or issue locally by nonresidentsSecurities issued by nonresidents may be admitted to the CSE, but residents are not generally permitted to purchase them.
Purchase abroad by residentsOutside of institutional investors, outward portfolio investment is permitted only for the following residents: Cypriot repatriates and residents temporarily working abroad who may freely use their balances in foreign currency or external accounts to purchase securities abroad, and resident employees of multinational enterprises who participate in the employee stock purchase plan offered by their employers.
Sale or issue abroad by residentsThese transactions are subject to the ceilings described above for purchases by nonresidents.
Bonds or other debt securities
Purchase locally by nonresidentsNonresidents may purchase bonds admitted to the CSE, including bonds issued by public companies and government bonds denominated in Cyprus pounds.
Sale or issue locally by nonresidentsSecurities issued by nonresidents may be admitted to the CSE, but residents are not generally permitted to purchase them.
Purchase abroad by residentsExcept for banks and institutional investors, only Cypriot repatriates and residents temporarily working abroad may purchase such securities by using their balances in foreign currency or external accounts.
Sale or issue abroad by residentsThe same regulations apply as for purchases locally by nonresidents of shares or other securities of a participating nature.
On money market instruments
Purchase locally by nonresidentsNonresidents may purchase treasury bills denominated in Cyprus pounds.
Sale or issue locally by nonresidentsPrior approval of the CBC is required for residents to purchase such instruments.
Purchase abroad by residentsExcept for banks and institutional investors, only Cypriot repatriates and residents temporarily working abroad may purchase money market instruments abroad by using their balances in foreign currency or external accounts.
Sale or issue abroad by residentsPrior approval of the CBC is required.
On collective investment securities
Purchase locally by nonresidentsThe purchase of securities issued by public investment companies in Cyprus is permitted within the limits applied to capital market securities. However, effective January 7, 2000, acquisition of such securities is free for citizens of EU states.
Sale or issue locally by nonresidentsSecurities issued by nonresidents may be admitted to the Cyprus Stock Exchange, but residents are not generally permitted to purchase them.
Purchase abroad by residentsExcept for institutional investors, only Cypriot repatriates and residents temporarily working abroad may purchase such securities abroad by using their balances in foreign currency or external accounts.
Sale or issue abroad by residentsPrior approval of the CBC is required.
Controls on derivatives and other instrumentsThere are controls on all transactions in derivatives and other instruments.
Controls on credit operations
Commercial credits
By residents to nonresidentsCredits with a maturity of up to 180 days for the export of goods from Cyprus may be freely granted. Other credits require approval of the CBC.
To residents from nonresidentsCommercial credits with a maturity of up to 200 days for imports of goods to Cyprus may be negotiated freely. Other credits are subject to approval of the CBC.
Financial credits
By residents to nonresidentsResidents other than authorized dealers are not allowed to grant these credits without the approval of the CBC.
To residents from nonresidentsThese credits are subject to approval by the CBC, which is usually granted for productive projects.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsAuthorized dealers may issue these guarantees without reference to the CBC in several cases including tender guarantees up to 5% of the tender price, performance bonds up to 10% of the contract price, guarantees for the refund of advance payments, and guarantees in respect of any other transactions where an immediate payment to the nonresident beneficiary could be made under the existing exchange control rules. In other cases, prior approval of the CBC is required.
Controls on direct investment
Outward direct investmentUntil January 6, 2000, approval of the CBC was required. The amount of capital that may have been directly transferred abroad was limited to £C0.5 million. If the issue of a guarantee alone was required, the amount of the guarantee should not have exceeded £C 1 million. In cases where direct transfer of capital as well as a guarantee were required, the total amount should not have exceeded £C 1 million, provided the amount of capital to be directly transferred did not exceed £C 0.5 million. In exceptional cases where it appeared certain that a large part of the investment was to be repatriated in a short time, the governor of the CBC may have approved larger amounts. Effective January 7, 2000, residents of Cyprus are allowed to undertake direct investment abroad without restriction as to the sector of the investment or the amount of foreign exchange involved. The transfer of capital abroad is effected as soon as the CBC is satisfied that the direct investment is genuine. Where the foreign exchange cost is substantial, the CBC reserves the right to take measures in order to mitigate the impact on the balance of payments.
Inward direct investmentIn the agricultural sector, foreign participation of up to 49% is allowed. Applications are examined by the CBC in consultation with the Ministry of Agriculture, Natural Resources, and Environment. The indicative minimum amount of investment is £C 100,000.



There is no limit on the percentage of foreign participation in the manufacturing sector, or in wholesale and retail trade. The CBC handles the applications if the foreign participation does not exceed 49% and the amount to be invested is lower than £C 750,000. Otherwise, applications are considered jointly by the CBC and the MCIT.



For most other activities, foreign participation of up to 100% is permitted. Over 70 types of services have been classified into two categories for which the indicative minimum limits of investment are £C 50,000 and £C 100,000.



Investors in the tourism sector are subject to the government tourism policy applicable at the time. The current policy provides for up to 49% of foreign participation in hotels and other tourism establishments. However, up to 100% of foreign participation may be allowed for supplementary tourism projects such as golf courses, marinas, etc. In tourist and travel agencies, up to 49% foreign participation is allowed, provided the foreign investor’s contribution is at least £C 150,000. A 49% limit also applies to restaurants and recreational centers as well as agencies representing imported good services.



Applications for direct investment in banking, insurance and other financial companies, public companies, newspaper and magazine publishing houses, and new airlines are considered on a case-by-case basis, and the extent of allowable foreign participation is decided on the merits of each individual case.



Effective January 7, 2000, direct investment in Cyprus by citizens of EU states is free, except in certain sectors that are governed by specific restrictive legislation, i.e., tertiary education and public utilities (no foreign participation is allowed); radio and television stations (foreign shareholding is limited to 2.5% a person); and publication of newspapers and magazines (subject to authorization by the Minister of the Interior). In addition, direct investments in Cyprus by non-EU citizens are subject to the three sector-specific restrictions listed for citizens of EU states. Applications are approved by the CBC for the percentage of foreign participation indicated above, provided national security matters are not compromised, natural and environmental conditions are not threatened, the Cypriot economy is not harmed, and the level (amount) of investment is adequate.
Controls on liquidation of direct investmentPermission of the CBC for the repatriation of the proceeds of sale or liquidation of approved investments (including capital gains) is readily granted at any time after payment of taxes.
Controls on real estate transactions
Purchase abroad by residentsResidents are generally not allowed to purchase real estate abroad, except when the real estate is part of an authorized direct investment project.
Purchase locally by nonresidentsIn accordance with the Immovable Property Acquisition (Aliens) Law, aliens cannot acquire immovable property in Cyprus other than by inheritance, except with the approval of the District Officer, and they are required to pay the purchase price with foreign exchange. When the real estate concerned exceeds two donums (one donum = 1,338 m2), approval may be granted only for the following purposes: (1) a primary or secondary residence not exceeding three donums; (2) professional or commercial premises; or (3) premises for industry sectors deemed beneficial to the Cypriot economy. Nonresidents of Cypriot origin do not need the approval of the District Officer.
Sale locally by nonresidentsProceeds are transferable abroad after payment of taxes, provided the seller acquired the property by paying with foreign exchange; otherwise, proceeds are transferable abroad through a blocked account.
Controls on personal capital movements
LoansPrior approval of the CBC is required.
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsFor gifts or endowments exceeding £C 500 every six months, and for the transfer of funds inherited from residents by nonresidents, prior approval of the CBC is required. Funds inherited are transferable abroad through a blocked account.
Settlement of debts abroad by immigrantsIn case the immigrant debtor does not maintain sufficient balances in foreign currency or external accounts to repay a debt abroad, approval of the CBC is granted for repayment through local funds.
Transfer of assets
Transfer abroad by emigrantsAt the time of emigration, emigrants may transfer abroad up to £C 100,000 of their local funds. Any remaining local funds are transferable abroad through blocked accounts. In addition, emigrants who are Cypriot repatriates (i.e., residents of Cyprus who were previously residents in other countries and decide to emigrate again from Cyprus) may transfer abroad in a lump sum all their funds that they previously imported in Cyprus and converted into local funds.
Transfer of gambling and prize earningsPrior approval from the CBC is required.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadPrior approval of the CBC is required.
Maintenance of accounts abroadAuthorized dealers are allowed to maintain working balances with foreign banks within limits prescribed by the CBC, as well as deposits abroad held as cover for their deposit liabilities in foreign currencies.
Lending to nonresidents (financial or commercial credits)Authorized dealers are allowed to grant medium- and long-term loans in foreign currencies to nonresidents of up to 20% of their deposit liabilities in foreign currencies. They are also allowed to grant loans and credits to international businesses registered in Cyprus of up to 10% of their deposit liabilities in foreign currencies.



In addition, authorized dealers are allowed to lend Cyprus pounds up to a maximum of £C 5,000 to nonresident individuals temporarily living in Cyprus, without reference to the CBC. For greater amounts, prior approval of the CBC is required.
Lending locally in foreign exchangeAuthorized dealers may grant certain short-term credit facilities in foreign currency (e.g., discounting bills of exchange) to residents without reference to the CBC. For other lending to residents in foreign currency, prior approval of the CBC is required. Such approval is usually granted for the following purposes: to finance transit trade, to provide working capital for resident oil companies or for industries operating in the industrial free zone, to meet the financial needs of Cyprus Airways, and to finance other desirable productive projects.
Purchase of locally issued securities denominated in foreign exchangeYes.
Differential treatment of deposit accounts in foreign exchangeThe monetary regulations applied to accounts in foreign currencies, held either by nonresidents or by residents, are different from those applied to accounts in Cyprus pounds.
Reserve requirementsA minimum reserve requirement of 7% applies only to deposits in Cyprus pounds.
Liquid asset requirementsLiquid assets in foreign currencies equal to at least 60% of deposit liabilities in foreign currencies must be maintained. For deposits in Cyprus pounds, there is no prescribed liquidity ratio. However, the liquidity positions of banks are monitored by the CBC for prudential purposes.
Interest rate controlsAccounts in Cyprus pounds are subject to an interest rate ceiling of 9%, whereas accounts in foreign currencies are not subject to interest rate ceilings.
Credit controlsYes.
Differential treatment of deposit accounts held by nonresidentsNonresidents’ deposit accounts in foreign exchange or in domestic currency are not treated differently from deposit accounts of residents.
Investment regulationsThere are prescribed assets that may be held with respect to accounts in foreign currencies. Authorized dealers may purchase securities issued abroad, such as securities issued by solvent foreign governments and traded in recognized stock exchanges abroad, within certain limits prescribed by the CBC.
Abroad by banksYes.
In banks by nonresidentsNonresidents may acquire up to 50% of the share capital of resident banks listed on the CSE. The acquisition of 10% or more of a bank’s share capital by any resident or nonresident person, either alone or with any associates, is subject to prior approval of the CBC.
Open foreign exchange position limitsThe net open/uncovered position in any one foreign currency and the overall aggregate net position in all foreign currencies may not exceed 10% and 15%, respectively, of the authorized dealer’s capital base, except with the prior approval of the CBC.
Provisions specific to institutional investors
Limits (max.) on securities issued by nonresidents and on portfolio invested abroadYes.
Limits (max.) on portfolio invested abroadInsurance companies may invest abroad up to 25% (up from 20%) of their trust fund, in securities quoted in a number of foreign stock exchanges. Public investment companies may also invest abroad a maximum of 25% of their portfolio. Other institutional investors are not allowed to invest abroad.
Limits (min.) on portfolio invested locallyYes.
Other controls imposed by securities lawsThe Cyprus Stock Exchange and Securities Laws and the regulations issued under these laws apply to transactions by nonresidents and residents in a nondiscriminating manner.



Effective February 2, 2000, the CBC imposed a ceiling of £C 5 million on investments abroad by public companies. Thus, these companies may invest in securities quoted on foreign stock exchanges up to 25% of their portfolio or £C 5 million, whichever is smaller.
Changes During 1999
Exchange arrangementJanuary 1. The peg to the ECU was replaced with a peg to the euro.
Arrangements for payments and receiptsJuly 28. Restrictions imposed against Libya pursuant to UN Security Council resolutions were suspended.
Payments for invisible transactions and current transfersMarch 24. Authorized dealers are empowered to approve payments for royalties and license fees as well as for specialized services in accordance with relevant agreements, without reference to the CBC.



November 29. Authorized dealers may carry out payments for insurance without reference to the CBC.



December 23. The CBC abolished restrictions on the use of credit cards abroad.
Capital transactions
Controls on capital and money market instrumentsJuly 23. The limit on total nonresident participation in the share capital of each domestic bank listed on the CSE was raised to 50% from 15%.
Changes During 2000
Capital transactions
Controls on capital and money market instrumentsJanuary 7. Except for banks, the CBC abolished exchange controls concerning the percentage of the share capital of Cypriot companies listed on the CSE that may be acquired by citizens of EU member states.
Controls on direct investmentJanuary 7. Direct investments by citizens of EU states were liberalized, except for tertiary education, public utilities, radio and television, and the publication of newspapers and magazines. Non-EU citizens were subject to these restrictions as well.
Provisions specific to institutional investorsFebruary 2. The CBC imposed a ceiling of £C 5 million on investments abroad by public companies. Thus, these companies may invest in securities quoted on foreign stock exchanges up to 25% of their portfolio or £C 5 million, whichever is smaller.

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