Cypriots use payment cards 1.3 times more frequently than other Europeans, with contactless transactions consistently accounting for over half of all card payments since 2022. This insight was shared on Thursday by Central Bank of Cyprus Governor Christodoulos Patsalides during his speech at the 12th Banking Forum and Fintech Expo in Nicosia.

The Governor outlined the Central Bank’s key priorities, including advancements in the digital economy, the evolving role of digital payments, the potential introduction of a digital euro, and regulatory frameworks ensuring responsible governance and societal considerations in financial systems. “Through these efforts, we aim to strengthen Cyprus’s position as a dynamic player in the European financial landscape,” he emphasized.

Governor Patsalides highlighted the resilience and adaptability of the Cypriot economy despite ongoing geopolitical challenges. He noted that Cyprus has achieved robust growth rates significantly above the EU average in recent years while maintaining a strong fiscal position. “Consistent surpluses have bolstered public finances,” he said, adding that this prudent economic management, combined with fiscal discipline and banking sector reforms, has led international rating agencies to upgrade Cyprus to investment-grade levels.

The Cypriot banking sector has demonstrated remarkable resilience, even amidst successive unprecedented crises. The Common Equity Tier 1 (CET1) capital ratio reached 23.5% in the third quarter of 2024, the highest in the country’s history and significantly above the EU average of 16%. Similarly, the Liquidity Coverage Ratio (LCR) soared to 336% in September 2024. The non-performing loans (NPL) ratio dropped to 6.5% during the same period, marking its lowest level since 2014.

Despite these achievements, the Governor urged caution, citing increasing macroeconomic uncertainty, geopolitical risks, and emerging threats such as cyber risks and climate change. “Banks must swiftly adapt to identify and address these evolving challenges effectively,” he stated. He also stressed that technological developments are reshaping the financial landscape, necessitating the adoption of suitable business models.

Governor Patsalides pointed to the transformative role of technologies such as artificial intelligence, cloud computing, digital wallets, big data analytics, and biometrics. These innovations enhance customer service, automate payments, streamline business processes, detect suspicious activities, and support customer profiling and digital inclusion. However, he noted that the potential of other promising technologies, such as distributed ledger technology (DLT), smart contracts, and tokenization, remains untapped.

One of the most significant trends discussed was the rise of digital payments, which now account for approximately 96% of non-cash transactions in Cyprus. Concurrently, cash payments have declined by 11% since 2022, placing Cyprus at the forefront of eurozone countries embracing cashless payments.

Mobile phone usage for online shopping has also surged, accounting for nearly one-quarter of all transactions, far exceeding the EU average of 16%.

Since January 9, instant payments have become a reality for all users, enabling fund transfers within 10 seconds and offering 24/7/365 access to funds.