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At its height in 2009 the Cypriot banking sector was equivalent to nine times the country’s GDP, today the sector is being radically downsized closer to the EU average of 3.5 times GDP.

The challenge is to find the optimal size, which will eventually be determined by the availability of capital, scale of opportunities and Cyprus’ capacity to supervise the sector.

Several EU countries developed significantly larger banking systems compared to their economies to promote themselves as international financial centres, and Cyprus was no different in this respect.

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