Despina Christofi


The article focuses on the role of banks in the financial crisis and compares the UK and Cyprus, since the banking sector of the latter was founded on the former’s model when it was a British colony. However, Cyprus’ financial sector has been influenced by its accession to the EMU, while the UK remains outside the eurozone. The article begins with the theoretical background, namely the ‘too-big-to-fail’ theory, the deficient banking corporate governance and the ineffective supervision of banks, and how they affected the UK and eurozone crises. Afterwards, the measures imposed by the UK government on its banking sector and the corresponding EU financial measures are discussed. A brief evaluation of the causes of the crisis in Cyprus follows. The article concludes that Cyprus can follow the UK’s example and focus its efforts on bank supervision to improve the financial industry and to avoid a future financial crisis.



banking supervision, regulation, too-big-to-fail, Twin Peak, European Banking Union, bail-in, deposit guarantee

EU Legislation

Consolidated version of the Treaty on the Functioning of the European Union, [2012] OJ C326/01.

Directive 2000/12/EC relating to the taking up and pursuit of the business of credit institutions [2000] OJ 2 126/1.

Directive 2014/49/EU on deposit guarantee schemes [2014] OJ 2 173/149.

Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms [2014] OJ 2 173/190. Protocol (No 4) on the Statute of the European System of Central Banks and the European Central Bank as annexed to the consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union [2010] OJ 83/01.

Regulation 1024/2013, conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions [2013] OJ 2 287/63.

Cyprus Legislation

Banking Law 1997-2009.

Central Bank of Cyprus Laws of 2002-2007.

Cooperative Societies Law (No. 22 of 1985 and 68 of 1987 as amended).

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How to Cite

“The Cypriot Banking Sector During the Financial Crisis and Its Reforms: An Examination in Light of the Case of the UK”. 2018. Cyprus Review 29 (1): 43-66. https://cyprusreview.org/index.php/cr/article/view/379.