In 1963, the Ottoman Bank (since renamed the Central Bank of Cyprus) was designated as the government's banking and currency clearing agent. The Banking law of 1997 provided for a properly-funded deposit insurance scheme and regulation were before the Hose of Representatives in late 1999. In general, banking services compare with the level experienced in European countries and the United States. There are six domestic banks. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $695.0 million. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $4.5 billion. The money market rate, the rate at which financial institutions lend to one another in the short term, was 4.93%. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 5.5%.
The Cyprus Stock Exchange, which opened in March 1996, ended 1996 with gains of just 0.2%, but experienced an extended bull run starting in late November of 1998. Since 1996, foreign investors are no longer required to obtain the Central Bank's permission to invest in the CSE, although there are limits on foreign participation. Legislation passed in 1999 prohibited insider trading and a new screen-based automated trading system helped enhance investor confidence. The CSE index reach 162.8 by June 1999, up from its initial starting point of 100 in 1996. By mid 2003, however, it had dropped to around 84. Market capitalization is $5.4 billion.