Cypriot president bids to take part in ECB's QE programme
By Michele Kambas and John O'Donnell
NICOSIA (Reuters) - Cyprus will stick to its reform pledges, the country's president told the head of the European Central Bank on Wednesday, promising to implement insolvency laws that he hopes will allow the island to benefit from a trillion-euro-plus programme to buy sovereign bonds.
At a meeting on the Mediterranean island, Nicos Anastasiades personally made the case to ECB President Mario Draghi for Cyprus to take part in the ECB's quantitative easing programme, a person familiar with the talks told Reuters.
Cyprus was bailed out by the euro zone and others, and its bonds are ineligible for purchase as part of the programme until a key reform, enabling foreclosure on properties, is resolved. Cyprus hopes it will be within weeks, allowing 500 million euros of its bonds to be bought, the person said.
Anastasiades made his case to Draghi, as the ECB's Governing Council of decision makers gathered in Nicosia to complete the details of the QE programme, which essentially provides a way to print money and bolster the flagging euro zone economy. Troubled Greece also does not qualify.
In remarks to an audience later, including members of the Governing Council and Draghi, Anastasiades said the island was already showing 'tangible' results in its reform programme.
"At national level we will continue the effort for reforms, with the same decisiveness and determination," Anastasiades said. "I remain positive that we will soon deliver what is expected from us. The new foreclosure law is expected to be a strong tool for the banking industry."
The remarks strike a more conciliatory tone than that of a combative new government in Athens, underscoring the differences between the former British colony and neighbouring Greece.
The gathering took place at the Presidential Palace. Earlier, demonstrators had protested against austerity.
"We feel that we have been wrong done by," said Ioannis Xydis, an accountant and member of the Cypriot branch of Syriza, the anti-austerity party now in power in Greece. "People have been told to pay for something they haven't done."
DRAGHI'S CAUTION
Addressing the same audience at the Presidential Palace, Draghi welcomed reform progress made by the country but said that there was no time for complacency and that more needed to be done in addressing bank loans at risk of non-payment.
Cyprus required a 10 billion-euro international bailout in 2013. The aid pulled the island from the brink of bankruptcy, following heavy losses at its banks after a Greek debt restructuring in 2011.
The ECB's support is important because it is one of a trio of inspectors that oversee the programme of economic reform that Cyprus agreed in return for aid, and because it plays an important role in the funding of banks.
It recently, for example, made it more difficult for Greek banks to access direct ECB funds by refusing to accept Greek bonds as security, making the lenders largely reliant on emergency back-up.
(Reporting By Michele Kambas and John O'Donnell; Editing by Ralph Boulton, Larry King)
