Cypriot Government Blames Former Central Banker for Bank Losses

Cyprus government spokesman Stefanos Stefanou said former central bank governor Athanasios Orphanides is responsible for billions of euros in losses sustained by Cypriot banks last year.

Orphanides “deficiently exercised his duties” causing “billions of euros in losses for the banks and the Cypriot economy,” Stefanou said today in an e-mailed statement. Stefanou was responding to an open letter from Orphanides to Cyprus President Demetris Christofias, published today by the Inbusiness website.

In the letter, Orphanides said Christofias and his communist party AKEL are carrying out a “relentless communication war” against the Cypriot banking system. The president delayed corrective fiscal measures and consented to the writedown of Greek government bonds, and is responsible for 4 billion euros ($5 billion) in bank losses, Orphanides alleged in the letter.

Orphanides wasn’t reappointed after his five-year term expired at the end of April. He was replaced by Panicos Demetriades. Orphanides, a former Federal Reserve economist, said on June 15 he will begin teaching at MIT Sloan School of Management later this year.

Orphanides declined to comment on Stefanou's statement when contacted today.

European authorities are pushing Cyprus to take a full bailout package worth as much as 10 billion euros, resisting the country’s attempt to limit any aid to its banking system, two officials said today.

Cyprus would be the fifth of 17 nations to take a financial lifeline. It’s angling for banking assistance to escape the oversight required in the programs granted to Greece, Ireland and Portugal, said the European Union officials who asked not to be named because the talks are private.

To contact the reporter on this story: Stelios Orphanides in Nicosia at

To contact the editor responsible for this story: Craig Stirling at

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