Cyprus financial market is going through continuous development and has enough potentiality to become one of the best international markets. It has everything that is necessary for the purpose. The country has highly educated workforce and the financial market itself is very broad. At the same time the legal system of the country is also very efficient to promote the development of the financial sector. On the other hand the option of foreign investment is also available in the country. At the same time the free markets of the country is also attracting the domestic as well as international investors.
The financial scenario of the country was totally changed in 1997 when the government of the country allowed 100% foreign investment in several fields to boost the Cyprus financial market. At the same time the rules and regulations regarding the foreign portfolio investment in Cyprus has been reviewed and the new regulations are designed.
These new regulations are very flexible and encouraged the investment. At the same time the banking sector of the country faced several positive changes and followed the directions of the European Union. The country has also removed the restrictions, which were imposed on the international transactions. It has facilitated the inflow of foreign funds. The non-residents of the country also participated in the process.
At the same time the tax reform of 2002 has proved to be very important in this context because it has lowered the rate of direct taxation. The central bank of Cyprus has been provided with the independent status and the controls over the interest rates are also not in practice now. The government of the country has made the capital account highly flexible but silultaneously the government has also protected the monetary steadiness of the country. The monetary policy of the country has played a major role in controlling the inflation rate. The financial market of Cyprus is aided by its monetary and fiscal policies.