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Cyprus Banking
The Central Bank of North Cyprus, the central bank of
the
"TRNC," was established by law in 1983 and began operation
the next
year. It performed the usual functions of a central bank,
but did
not issue a national currency. The Turkish lira was used
instead.
Establishment of a separate "TRNC" currency was
occasionally
discussed, but concrete action for this purpose had not
been
undertaken as of 1990. Foreign exchange was traded freely
in the
"TRNC," with no restrictions on transactions. A free
currency
exchange market was seen as part of a liberal economy. The
government set interest rates as high as 40 percent for
one-year
deposits and 48 percent for some other deposits to prevent
capital
flight and shield deposits against the effects of chronic
high
inflation.
The central bank monitored the activities of about a
dozen
Turkish Cypriot banks and the branches of several Turkish
banks
active in the "TRNC." By the late 1980s, the largest
commercial
bank was the Türk Bankasi, followed by the Cyprus Credit
Bank and
the Cyprus Commercial Bank. The cooperative movement's
bank, the
Turkish Cypriot Cooperative Central Bank, was important to
cooperative members throughout the "TRNC." The Muslim
religious
foundation Evkaf had its own bank, Kibris Vakiflar
Bankasi, which
managed the foundation's financial assets and the revenue
accruing
to it from its widespread and varied real estate holdings.
Data as of January 1991
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