**Excess Liquidity in Cyprus Banks Declines to €17.4 Billion in 2025**
The Central Bank of Cyprus (CBC) has reported a decrease in excess liquidity within the Cypriot banking system, which fell to €17.4 billion at the end of 2025, down from €18.4 billion the previous year. This information was detailed in the CBC's annual report titled “The Implementation of Monetary Policy in Cyprus,” which analyzes significant developments throughout 2025.
The report highlights a notable reduction in the value of the CBC's monetary policy bond portfolio, which is composed of securities acquired through the Asset Purchase Programme (APP) and the Pandemic Emergency Purchase Programme (PEPP). The portfolio's value decreased from €6.5 billion at the end of 2024 to €5.7 billion by the close of 2025.
Despite these changes in liquidity and bond portfolio values, the Central Bank of Cyprus maintained a relatively stable balance sheet. Total assets saw a slight increase, rising from €28.6 billion at the end of 2024 to €28.7 billion by the end of 2025.
The banking sector experienced significant growth in lending activities during the same period. Loans held by banks surged from €27.6 billion at the end of 2024 to €31.7 billion by the end of 2025, indicating a robust demand for credit within the economy. This increase in lending occurred alongside a decline in deposits and cash equivalents, which fell from €20.4 billion to €19.8 billion.
Interestingly, even with the drop in deposits, the total liabilities of the banking sector increased from €59.4 billion to €63.1 billion during 2025. The CBC attributed this rise in liabilities primarily to higher deposits from households and non-financial corporations, suggesting a shift in the composition of deposits within the banking system.
Overall, the report from the Central Bank of Cyprus underscores a dynamic year for the banking sector, characterized by increased lending despite a decline in excess liquidity and deposits. The findings may reflect broader economic trends and shifts in consumer and corporate behavior in response to monetary policy and market conditions.