Cypriot authorities need to focus on rebuilding the bailed-out country's gutted banking sector and eliminate controls on money flows, a commission of experts has advised.
The four-member Independent Commission on the Future of the Cyprus Banking Sector says the government must leave no doubt that it can live up to the terms of its rescue so as not to fan concerns that the capital controls will stay in place over the long term.
"A clear schedule of steps needs to be laid out to reconstitute (Bank of Cyprus) and the cooperative sector, so that capital controls are lifted and uncertainty removed," said a summary of the Commission's recommendations.
The four-person Commission says there are "sound reasons" for Cyprus to keep a large banking sector over the longer term, primarily because there are no other sources of finance in the country.
But it recommends that bank boards be strengthened to counterbalance the influence of executives, with the addition of at least two non-Cypriots as members.
It also criticised an ongoing dispute between the government and the Central Bank governor, Panicos Demetriades.