Cyprus’s New Fiscal Framework: A Catalyst for Sustainable Growth and Social Equity

by THEFUTURE.TEAM

December 23, 2025

Introduction To A New Era

The recently approved fiscal framework, endorsed by the Cyprus House of Representatives, signals a transformative shift for the nation’s economy. According to Finance Minister Makis Keravnos, the reform is designed to sustain economic growth, enhance competitiveness, and provide substantial support to Cypriot families in the coming years.

Commitment To Modernization And Economic Resilience

The approval of this modern tax system is a milestone culmination of an extensive and demanding effort—one that was integral to the pre-election commitments of the Government of Nikos Christodoulides. The reform embodies a comprehensive policy to modernize society, boost entrepreneurial spirit, uplift the country’s international image, and improve the overall living standards of citizens. In doing so, it reinforces the economy’s resilience against future uncertainties.

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A Fair And Competitive Tax System

Set to be implemented on January 1, 2026, the new tax system promises a more equitable distribution of fiscal responsibilities while strengthening social cohesion. Minister Keravnos emphasized that the contemporary framework not only supports the real economy but also enhances the competitiveness of Cypriot enterprises, thereby attracting productive, high-quality foreign investments. The reform is strategically crafted to stimulate an environment conducive to business growth and innovation.

Targeted Relief For Families And Households

An important element of the reform is its targeted approach to personal taxation. By markedly reducing the tax burden on households—particularly those with children—the new framework offers tangible relief to vulnerable groups and the middle class, which is widely regarded as the backbone of both society and the economy. Such measures are crucial in reinforcing social stability and ensuring long-term prosperity.

Collaboration And Strategic Partnerships

Minister Keravnos extended his thanks to the numerous stakeholders whose hard work was pivotal in drafting, negotiating, and finalizing the reform. Key contributions came from the officials at the Ministry of Finance, the Cyprus University of Economics and Business’s research center, and various social partners. Furthermore, the cooperation of the members of the House of Representatives, including Chairwoman Christiana Erotokritou, and all parliamentary factions, was instrumental in refining the proposals under tight deadlines.

A Vision For Long-Term Growth

In conclusion, Minister Keravnos reassured both businesses and citizens that the newly established fiscal framework will serve as a foundation for a stable and growth-oriented tax system. This policy is expected to support long-term economic advancement, invigorate competitiveness, and safeguard the well-being of Cypriot families, ensuring that the nation remains steadfast on its path to modernity and prosperity.

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ECB Launches Geopolitical Stress Tests For 110 Eurozone Banks

by THEFUTURE.TEAM

March 9, 2026

The European Central Bank is preparing a new round of geopolitical stress tests aimed at assessing potential risks to major financial institutions across the euro area. Up to 110 systemic banks, including institutions in Greece and the Bank of Cyprus, will take part in the exercise, which examines how geopolitical events could affect financial stability.

Timeline And Testing Process

Banks are expected to submit initial data on March 16, 2026. Supervisors will review the information in April, while the final results are scheduled to be published in July 2026. The process forms part of the ECB’s broader supervisory work to evaluate financial system resilience under different risk scenarios.

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Geopolitical Shock As The Primary Concern

The stress tests place particular emphasis on geopolitical risks. These may include armed conflicts, economic sanctions, cyberattacks and energy supply disruptions. Such events can affect banks through changes in market conditions, borrower solvency and sector exposure. Lending portfolios linked to regions or industries affected by geopolitical developments may face higher risk levels.

Reverse Stress Testing: A Tailored Approach

Unlike traditional stress tests that apply the same scenario to all institutions, the reverse stress test requires each bank to define a scenario that could significantly affect its capital position. Banks must identify a geopolitical shock that could reduce their Common Equity Tier 1 (CET1) ratio by at least 300 basis points. Institutions are also expected to assess potential effects on liquidity, funding conditions and broader economic indicators such as GDP and unemployment.

Customized Risk Assessments And Supervisor Collaboration

This methodology allows banks to submit risk assessments based on their own exposures and operational structures. The approach is intended to help supervisors understand how geopolitical events could affect institutions differently and to support discussions between banks and regulators on risk management and contingency planning.

Differentiated Vulnerabilities Across Countries

A joint report by the ECB and the European Systemic Risk Board indicates that countries respond differently to geopolitical shocks. The Russian invasion of Ukraine led to higher energy prices and inflation across Europe, prompting central banks to raise interest rates. Belgium, Italy, the Netherlands, Greece and Austria experienced increases in borrowing costs and lower investor confidence. Germany, France and Portugal recorded more moderate changes, while Spain, Malta, Latvia and Finland showed intermediate levels of exposure.

Conclusion

The geopolitical stress tests will not immediately lead to additional capital requirements for banks. Their results will feed into the Supervisory Review and Evaluation Process (SREP). ECB supervisors may use the findings when assessing capital adequacy, risk management practices and operational resilience at individual institutions.

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