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Cyprus Central Bank To Raise Countercyclical Buffer Rate To 1.5% Amid Rising Systemic Risks

by THEFUTURE.TEAM

January 15, 2025

The Central Bank of Cyprus (CBC) has announced plans to raise the countercyclical buffer rate (CCyB) from 1% to 1.5%, with the change set to take effect on 14 January 2026. The decision, disclosed on 10 January 2025, aims to strengthen the resilience of the banking sector in light of growing systemic risks.

The CCyB is a regulatory tool that requires banks to maintain additional capital during periods of heightened economic risk. This buffer helps absorb potential losses, ensuring financial stability and the continuous flow of credit to the economy during times of stress.

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Rising Risks Prompt Policy Action

The CBC’s quarterly assessment identified an uptick in systemic risks, driven by geopolitical developments, economic turbulence, and potential tail events in the global economy. Factors contributing to this heightened risk include:

Escalation of the Middle East conflict.
Continued globalization of the war in Ukraine.
Growing protectionist measures led to new trade restrictions.

These risks, according to the CBC, threaten the domestic macroeconomic environment and, by extension, the stability of the banking sector.

Broader Concerns At The EU Level

The CBC’s decision aligns with concerns raised by European institutions.

The European Systemic Risk Board (ESRB) highlighted in its December 2024 press release the need for enhanced resilience across the EU financial system amid heightened political uncertainty and geopolitical tensions.
The European Central Bank (ECB), in its Financial Stability Review, stressed the importance of ensuring banks maintain sufficient capacity to absorb losses during periods of economic stress.

Enhancing Resilience Through Increased Buffers

By raising the CCyB rate to 1.5%, the CBC aims to channel a portion of bank profits towards creating a larger buffer of loss-absorbing capital. This measure is intended to:

Strengthen the ability of banks to withstand potential crises.
Ensure the uninterrupted flow of credit to the real economy, even in times of economic stress.

The CBC emphasized that the previous rate of 1% was insufficient given the prevailing risk landscape and that the increased buffer will enhance the banking sector’s capacity to navigate future challenges.

This proactive adjustment reflects a broader commitment to safeguarding financial stability in Cyprus while aligning with EU-wide efforts to reinforce the financial system’s resilience.

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EU Farm Output Prices Decline For The First Time In Nine Months

by THEFUTURE.TEAM

March 12, 2026

EU Market Adjustments Signal New Price Trends

Agricultural output prices across the European Union declined in the fourth quarter of 2025, marking a shift after several quarters of increases. Data from Eurostat shows that farm gate prices fell by 1.9% compared with the same period in 2024.

Crisis of Declining Prices In Select Markets

Cyprus recorded one of the more notable decreases in agricultural input costs among EU member states, with prices falling by 2.6% compared with Q4 2024. The reduction eased cost pressures for the local agricultural sector following periods of higher prices earlier in 2025. Across the EU, prices for goods and services consumed in agriculture remained relatively stable. Non-investment inputs such as energy, fertilisers and feedingstuffs showed limited overall changes during the quarter.

Country-Specific Divergence In Price Movements

Eurostat data highlights considerable variation across member states. Fifteen EU countries recorded declines in agricultural output prices. Belgium registered the largest decrease at 12.9%, followed by Lithuania (8.2%) and Germany (6.0%). At the same time, twelve countries reported increases in output prices. Ireland recorded the strongest rise at 6.8%, followed by Slovenia (5.6%) and Malta (4.2%).

Stability In Agricultural Inputs Amid Commodity Shifts

Agricultural input prices also showed mixed developments. Eleven member states recorded declines, including Cyprus (2.6%), Belgium (2.1%) and Sweden (2.0%). Other countries experienced moderate increases, including Lithuania (4.2%), Ireland (3.3%) and Romania (2.5%). Among major agricultural commodities, milk prices declined by 4.1% while cereal prices fell by 8.9% across the EU. In contrast, fertilisers and soil improvers increased by 7.9%, reflecting continued volatility in input markets.

Outlook For EU Agriculture

The latest Eurostat data points to uneven price developments across the EU agricultural sector. While input prices remained broadly stable in many markets, movements in output prices varied significantly between member states. These trends highlight the need for farmers and policymakers to adapt to shifting commodity prices and changing cost structures across the European agricultural market.