* Governor under growing pressure to resign
* President says "very saddened" by rift with cenbank
* Cenbank, govt call on each other to cooperate
By Karolina Tagaris
NICOSIA, April 14 Cyprus's central bank governor
said on Sunday he was willing to work with the government to
pull the island out of its economic crisis, provided the bank's
independence was respected.
A rift between Governor Panicos Demetriades, appointed last
May by the communist former administration, and the ruling
centre-right government has deepened and pressure grown on him
to resign over his handling of the crisis.
In the past week, the Cypriot parliament started an
investigation against Demetriades, President Nicos
Anastasiades's government withdrew the appointment of his
trusted deputy and three central bank officials resigned.
The unfolding drama drew a scathing response from European
Central Bank (ECB) President Mario Draghi, who wrote to the
Cypriot president telling him any attempt to effectively sack
the governor could land Cyprus in the European Court of Justice.
Anastasiades, when asked by reporters on Sunday to comment
on the apparent feud between the two bodies, said he was
"frankly, very saddened".
"My intention to work with the country's democratic
institutions is a given," Demetriades, who sits on the ECB's
governing council, was quoted as saying in an interview with the
"We are ready to respond to every call for cooperation and
coordination for the benefit of this country always, however
within the framework of total respect towards the central bank's
independence, as stipulated by the ECB."
Under European Union law, a governor can only be dismissed
if he no longer fulfils the conditions required for the
performance of his duties, or if he is guilty of serious
The investigation launched by Cypriot lawmakers this week is
seeking to find out whether Demetriades supplied enough
information during an investigation into the demise of Cyprus's
two biggest lenders, which left the economy in disarray.
The collapse of the Mediterranean island's banking system
imposed massive losses on depositors in order to qualify for a
10 billion euro ($13 billion) bailout by the European Union and
International Monetary Fund.
The departures in the past week from the regulator's board
have slimmed the six-member board to two, including Demetriades.
However, executive power rests with the governor so while they
add to the pressure on Demetriades to quit, they are not
expected to affect policymaking.
The government, in power for under two months, has sought to
play down accusations it was intervening with the central bank's
Authorities have demanded Demetriades take back comments he
made on the sidelines of a Eurogroup meeting in Dublin this week
that the central bank's independence was under attack, according
to the government's spokesman, Christos Stylianides.
"I did not expect Mr Demetriades to make public statements,
especially while abroad, accusing his country's government and
his country's parliament of supposedly acting against him,"
Anastasiades told reporters.
He said it was up to Demetriades to cooperate with the
"I hope he will work towards this... and behave in a way
that will finally restore stability in the banking system," he