Historical Sketch

Medieval Cyprus was ruled by the Knights Templar and the Republic of Venice until the Ottoman took over in 1570. As a result of the defeat in the Russo-Turkish War, a British protectorate was established in 1878 while the Ottoman sultan remained the nominal ruler until the outbreak of World War I. In November 1914, Cyprus was annexed and became a British crown colony in 1925. In 1960, Cyprus attained independence as a republic in which government and public offices were allocated by ethnic quotas. The tensions between the Greek and Turkish population escalated after a nationalist coup d'état in July 1974, organized with the goal of merging the island with Greece, and the subsequent Turkish invasion of the northern part five days later. Since then, the island is partitioned between the Republic of Cyprus and the Turkish Republic of Northern Cyprus, the latter formally proclaimed in November 1983 but without international recognition. In May 2004, Cyprus joined the European Union, nominally as a whole although all EU legislation is suspended in Northern Cyprus until a final settlement for the secession is reached.

Monetary History Overview

With the establishment of the protectorate over Cyprus, Britain de facto introduced the Sterling accounting, using the Piastre as unit of account against which the British, Turkish and French coins were rated. The Turkish copper coins were demonetized within a year and replaced by newly issued coins in the British style. The Turkish silver got withdrawn in mid-1882, and all foreign gold coins were demonetized in 1901. In the same year, the British silver coinage was replaced by local coins, just the gold Sovereign remained current. The Cyprus Pound was nominally created by the establishment of a (provisional) Currency Commission immediately after the annexation of 1914, which subsequently took over the issuance of state paper money. The Cypriot currency was on par with the Pound Sterling. In August 1955, the Cyprus Pound went decimal such that 1000 Mils went to the Pound instead of 180 Piastres, a counting that went back to the time of the protectorate. In 1983, the subunit was changed again so that Pound was subdivided into 100 Cents. After independence the Currency Commission handed over office to the Central Bank in 1963, otherwise the monetary situation remained unaltered. In 1973, Cyprus did not follow the British devaluations and unpegged its currency, which subsequently settled about 15% above parity. After the 1990s the Pound aligned with European Currency Unit (ECU) and the Euro, rather than the British currency. In 2008, Cyprus joined the European Monetary Union and introduced the European Euro. The Cypriot banknotes and coins were withdrawn in within a month. The implementation of the Euro introduction in Northern Cyprus has been nominally suspended until a final settlement for the secession is reached.

In secessionist Northern Cyprus, the Turkish Lira became current immediately after the occupation. As there were no central banking structures, a local commercial bank got mandated in February 1975 to take on the role, however with no intention to create a separate currency. With the proclamation of independence in 1983, the monetary structures were solidified. Briefly before, the Turkish Lira became the nominal accounting unit, the Cypriot currency remained tolerated for private use until it got fully demonetized in March 1991. A year later, in June 1984, the Central Bank of Northern Cyprus began operations. Since then, Northern Cyprus is part of the Turkish monetary area, the 2005 redenomination of the Turkish currency was implemented together with the mainland.

Cyprus joined the International Monetary Fund (IMF) on 21.12.1961.

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