Opinion of the European Central Bank of 21 September 2026 on the prevention of conflicts of interests of the Governor, Deputy Governor and employees of the Central Bank of Cyprus (CON/2026/29)

OPINION OF THE EUROPEAN CENTRAL BANK of 21 September 2026 on the prevention of conflicts of interests of the Governor, Deputy Governor and employees of the Central Bank of Cyprus (CON/2026/29) Introduction and legal basis

On 4 August 2026 the European Central Bank (ECB) received a request from the Minister for Justice and Public Order of Cyprus for an opinion on a draft law on the control of incompatibility of the duties of and the undertaking of employment in the private sector by public officials (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and Article 2(1), third indent, of Council Decision 98/415/EC , as the draft law relates to the Central Bank of Cyprus (CBC). In accordance with Article 17.5, first sentence, of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

1. Purpose of the draft law

1.1 The draft law aims at consolidating, recasting and repealing two existing laws: (1) the Law on the incompatibility of certain professional and other related activities of certain public officials in the exercise of their duties (Law 7(I)/2008) , and (2) the Law on the control of the undertaking of employment in the private sector by former public officials and certain former employees of the public and the wider public sector (Law 114(I)/2007) . 1.2 According to the draft law, its purpose is to create a mechanism to regulate any ‘incompatibility’ of officials (i.e. actions, activities or functions not to be performed by officials), prevent conflicts of interest between public duties and private interests of officials, ensure transparency and integrity in the public administration, and control the taking-up of employment in the private sector by officials, judges and employees of the public and wider public sector, with a view to protecting the public interest. 1.3 Subject to the relevant provisions of the Constitution and the applicable laws and regulations concerning incompatibility, the draft law imposes a prohibition on certain senior public officials, including the Governor and Deputy Governor of the CBC, from performing a number of actions, activities or functions during their term of office. These include (a) participating, or holding a position

1 Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42, ELI: http://data.europa.eu/eli/dec/1998/415/oj).

2 Ο περί του Ασυμβιβάστου προς την Άσκηση των Καθηκόντων Ορισμένων Αξιωματούχων της Δημοκρατίας Ορισμένων Επαγγελματικών και Άλλων Συναφών Δραστηριοτήτων τους Νόμος του 2008 (Ν. 7(I)/2008).

3 Ο περί του Ελέγχου της Ανάληψης Εργασίας στον Ιδιωτικό Τομέα από Πρώην Κρατικούς Αξιωματούχους και Ορισμένους Πρώην Υπαλλήλους του Δημοσίου και του Ευρύτερου Δημόσιου Τομέα Νόμος του 2007 (Ν. 114(I)/2007). as chair or member of the board of directors, managing director, general manager, or their deputies, in any company, partnership, consortia or undertaking or public undertaking which submits tenders to or enters into a contract with the public sector or wider public sector, or with any legal person governed by public law, or with a state or semi-state company; and (b) holding a position as managing director, chair or member of the board of directors or director of a public or private company or a legal person governed by public law engaged in electronic or print media. 1.4 Similarly, the draft law imposes an obligation on certain public officials, including the Governor and Deputy Governor of the CBC, to disclose in writing, before or immediately after the taking-up of office, to the appointing body or to the Committee discussed in paragraph 1.5, any incompatibility that falls within the scope of the draft law. The draft law prohibits such officials from accepting the office, unless they first submit a written declaration of commitment to resign, alienate or terminate, within a reasonable time, the specific financial transaction, relationship or status that creates the incompatibility. Failure to comply with these obligations or a finding of incompatibility by the Committee, irrespective of the provisions of any other law, constitutes a legitimate reason for the appointing body to revoke or terminate the appointment in question. 1.5 The draft law establishes a Committee of three members for the investigation of incompatibilities of public officials and lays down its responsibilities. The Committee is established as an independent and autonomous body and any form of influence over its work that could threaten its independence and autonomy is prohibited. The draft law regulates matters related to the composition and organisation of the Committee. In particular, it provides that the Committee is comprised of (a) a chair, who must hold the qualifications required for appointment of a judge of the Supreme Constitutional Court or Supreme Court; (b) the Accountant General of the Republic or a senior official of the Treasury proposed by the Accountant General; and (c) a public prosecutor of the Republic or a senior counsel of the Law Office of the Republic proposed by the Attorney General. The chair and the members of the Committee are to be appointed by the Council of Ministers. The draft law also imposes a number of responsibilities on the Committee, such as the responsibility to submit an annual report on its work to the Council of Ministers and the House of Representatives, to ensure the preparation and publication of regular reports on its activities, and to keep registers. 1.6 The draft law further imposes a strict confidentiality requirement upon the members of the Committee. Accordingly, all information submitted to the Committee must be assessed with full secrecy. In addition, the members of the Committee, and any other persons providing assistance or performing any relevant tasks, are prohibited from providing, communicating and disclosing to third parties, and from using for their own benefit, any information concerning any application, taking-up of employment or incompatibility during their term of office as members of the Committee or their employment with the Committee, or after its termination. In exercising its powers, the Committee must also ensure that the timeframes provided for in the draft law are respected, and that proceedings before it are conducted in a fair manner and in accordance with the principles of equality, proportionality and natural justice. 1.7 The draft law grants the Committee the right to carry out an investigation of incompatibility on its own initiative, following a complaint, which can be anonymous, or following the written disclosure by a person undertaking office. The draft law sets out the procedure which must be followed in such cases by the Committee. Specifically, the Committee must notify the official concerned or the appointing body of the content of the complaint or written disclosure and must examine the complaint or written disclosure as soon as possible. If it does not appear prima facie that the underlying action, activity or function constitutes a ground for incompatibility, the Committee must issue a decision and notify it as described in paragraph 1.8. If it does appear prima facie that the action, activity or function constitutes a ground for incompatibility, the Committee must invite the official concerned to appear before it and provide clarifications or be heard, or, if he or she wishes, submit within 15 days his or her representations, together with all relevant evidence. During its examination of the case, and subject to the provisions of Regulation (EU) 2016/679 of the European Parliament and of the Council and any other relevant legislation, the Committee may request, by way of a specific, written and reasoned request, any information it deems necessary for the exercise of its powers under the draft law from any natural or legal person or ministry, deputy ministry, agency or authority or section of the public or wider public sector or from any other natural or legal person that it reasonably considers to be able to provide the requested information. Following the completion of the procedure, (a) if the Committee decides that there seems to be an incompatibility or a failure to disclose an incompatibility, it must draw up a reasoned decision setting out the main points on which it is based; or (b) if the Committee does not consider that an incompatibility exists, it must draw up a reasoned decision exempting the concerned official from the investigation. The reasoned decision adopted by the Committee constitutes an administrative act and may be subject to an appeal before the Administrative Court. 1.8 The reasoned decision of the Committee is then notified to the official concerned or the person initiating the investigation, the appointing body, the Council of Ministers, the Chair of the House of Representatives for the attention of its members, and the Attorney General of the Republic. The decision must also be published in the Government Gazette of the Republic of Cyprus and may also be published on the website of the Committee. 1.9 The draft law provides that, irrespective of any other legal consequences pursuant to this or another law, all acts, contracts, privileges, grants or other concessions of rights that were performed for the benefit of the official done in violation of the provisions on incompatibility are to be considered void ab initio. 1.10 Finally, the draft law sets out the procedure that must be followed by certain former officials and employees of the public and wider public sector when their service or term of office has ended. In particular, the draft law requires any person who has served as an official as specified in the annex to the draft law, as a judge or as an employee of the public and wider public sector and who has, by any means, retired or terminated their service or term of office, to submit a written application to the Committee of their intention to take up any work with a specific employer in the private sector within the first two years from the date of retirement or termination of their service or term of office. The Committee must examine such applications within two months and decide in the public interest whether the applicant may take up employment in the private sector to which the application relates,

4 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p. 1 ELI: http://data.europa.eu/eli/reg/2016/679/oj). with or without restrictions or conditions as to the nature of the duties or the time of the taking-up of employment. The Committee may also, on its own initiative or following a complaint, examine whether the abovementioned persons are in breach of these rules. The CBC and its employees fall within the definitions of the ‘wider public sector’ and ‘employee of the public and wider public sector’ in the draft law respectively , and are therefore captured by the abovementioned post-employment rules. The Governor and Deputy Governor of the CBC, on the other hand, are not among the officials specified in the relevant annex.

2. Observations

2.1 The ECB welcomes the objective of the draft law to enhance the legal framework for assessing incompatibilities in the public sector to ensure transparency and legal certainty and to reduce the risk of conflicts of interests. 2.2 The ECB understands that currently the Governor and Deputy Governor of the CBC fall within the scope of Law 7(I)/2008, which contains provisions similar to those included in the draft law concerning incompatibility. As mentioned in paragraph 1.3, the Governor and Deputy Governor of the CBC are also subject to the draft law’s provisions on incompatibility ‘subject to the relevant provisions of the Constitution and the applicable laws and regulations concerning incompatibility’. However, for reasons of legal certainty and clarity, the ECB proposes that the consulting authority considers explicitly clarifying in the draft law that these provisions are without prejudice to the national legal framework specifically applicable to the CBC which applies to the Governor and Deputy Governor. 2.3 Based on considerations of central bank independence, and in order to ensure the independence of national central banks (NCBs) such as the CBC, when exercising the powers and carrying out the tasks and duties conferred upon them by the Treaties and the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’), the ECB has established an ethics framework. This includes the ECB’s Code of Conduct for high-level ECB officials (hereinafter the ‘Single Code’), which applies, among others, to the members of the Governing Council of the ECB when exercising their functions as members of a high-level ECB body, and Guideline (EU) [2021/2253] of the European Central Bank (ECB/2021/49) , which is addressed to the NCBs of the Eurosystem and establishes ethics requirements applicable to the members of

5 The term ‘wider public sector’ is defined in the draft law as any legal person governed by public law or body governed by public law, including local authorities or any other body governed by public law without legal personality established by law in the public interest and whose funds are either provided or guaranteed by the Republic. The term ‘employee of the public and wider public sector’ is defined to mean any employee of a ministry, deputy ministry, directorate general, department, service, independent service or office or body governed by public law or a legal person governed by public law and any member of the Cyprus Police, the Cyprus Fire Service and the Army serving in a position on the A13 scale or above or on a scale equivalent thereto and includes a person who has served under a private-law employment contract.

6 Code of Conduct for high-level ECB officials (OJ C 478, 16.12.2022, p. 3).

7 Guideline (EU) [2021/2253] of the European Central Bank of 2 November 2021 laying down the principles of the Eurosystem Ethics Framework (ECB/2021/49) (OJ L 454, 17.12.2021, p. 7, ELI: http://data.europa.eu/eli/guideline/2021/2253/oj). the decision-making bodies and staff of the NCBs . This framework contains post-employment and cooling-off rules, which apply to the Governor, Deputy Governor, senior officials and, where applicable, staff of the CBC. 2.4 Guideline (EU) [2021/2253] (ECB/2021/49) was implemented at the national level by amending accordingly the Directive on the Terms of Service of the Employees of the Central Bank of Cyprus . The ECB thus welcomes the exclusion of the Governor and Deputy Governor of the CBC from the provisions of the draft law which concern the undertaking of employment in the private sector, and proposes that the draft law clarifies that these provisions are also without prejudice to the national legal framework specifically applicable to the employees of the CBC. 2.5 The ECB stresses that the draft law should not jeopardise compliance with the provisions on central 10 11 bank independence provided for in the Treaty and in the Statute of the ESCB . In particular, the ECB highlights that, pursuant to Article 14.2, second paragraph, first sentence, of the Statute of the ESCB, ‘a Governor may be relieved from office only if he no longer fulfils the conditions required for the performance of his duties or if he has been guilty of serious misconduct’. Applying the same rules regarding the grounds for relieving Governors from office to other members of the decision-making bodies of NCBs involved in the performance of ESCB-related tasks also safeguards the personal independence of those persons . The application of the same rules regarding dismissal to both Governors and members of decision-making bodies is particularly pertinent where a Governor is ‘first among equals’ with other members who have equivalent voting rights, or where other members are involved in the performance of ESCB-related tasks . 2.6 In Cyprus, the dismissal of the Governor, Deputy Governor and other members of the decisionmaking bodies of the CBC is regulated in the Law on the CBC and relevant provisions of the Constitution . The ECB understands that the provision of the draft law, regarding the failure of officials to comply with the disclosure obligations or a finding of incompatibility by the Committee, irrespective of the provisions of any other law, establishes grounds for the appointing body to revoke or terminate the appointment in question. This raises concerns, as these grounds for dismissal are not aligned with Article 14.2 of the Statute of the ESCB. For the sake of ensuring legal certainty and compliance with Article 14.2 of the Statute of the ESCB, the ECB suggests explicitly clarifying that

8 See paragraph 2.2 of Opinion CON/2025/23, paragraph 2.2 of Opinion CON/2025/27, paragraph 2.2 of Opinion CON/2025/32, paragraph 2.2 of Opinion CON/2025/33, paragraph 2.2 of Opinion CON/2025/36 and paragraph 2.2 of Opinion CON/2025/38. All ECB opinions are published on EUR-Lex.

9 Κ.Δ.Π. 195/2024.

10 See paragraph 3.3 of Opinion CON/2009/64 and paragraphs 3.1 and 3.2 of Opinion CON/2010/27.

11 Primarily provided for in Article 130 of the Treaty and Article 7 of the Statute of the ESCB.

12 Article 130 of the Treaty and Article 7 of the Statute of the ESCB refer to ‘members of the decision-making bodies’ of NCBs, rather than to Governors specifically.

13 See the ECB’s Convergence Report 2026, paragraph 2.2.3.

14 Ο περί της Κεντρικής Τράπεζας της Κύπρου Νόμος του 2002 (Ν. 138(I)/2002). Article 18(4) of the Law on the CBC, as amended, provides that ‘Subject to paragraph 4 of Article 118 of the Constitution, the Governor and the Deputy Governor may be removed from office, only if in the opinion of the Council established under the eighth paragraph of Article 153 of the Constitution, they no longer fulfil the conditions required for the performance of their duties or they are guilty of serious misconduct’.

15 Το Σύνταγμα της Κυπριακής Δημοκρατίας. See, in particular, Articles 118 to 121 thereof. the abovementioned provision of the draft law does not apply to the Governor and the Deputy Governor of the CBC . 2.7 Finally, the ECB takes note of the provisions in the draft law which allow the Committee to obtain any information it deems necessary for the performance of its tasks following a specific, written and reasoned request, as well as the professional secrecy rules which apply to the members of the Committee and any other persons involved in its work. At the same time, the ECB suggests ensuring explicit compatibility of the draft law with the relevant frameworks on professional secrecy and confidentiality , in particular Article 37 of the Statute of the ESCB, Article 27 of Council Regulation 18 19 (EU) No 1024/2013 , and the public access regime of the ECB . In this respect, it should be clarified in the text of the draft law that any obligation to provide information is without prejudice to professional secrecy requirements under the Statute of the ESCB, Regulation (EU) No 1024/2013 and the public access regime of the ECB. This opinion will be published on EUR-Lex. Done at Frankfurt am Main, 21 September 2026. [signed] The President of the ECB Christine LAGARDE

16 See paragraph 3.1 of Opinion CON/2021/2.

17 See paragraph 3.1 of Opinion CON/2012/76, paragraph 3.1 of Opinion CON/2019/31 and paragraph 3.2 of Opinion CON/2021/16.

18 Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63, ELI: http://data.europa.eu/eli/reg/2013/1024/oj).

19 As per Decision ECB/2004/3 of the European Central Bank of 4 March 2004 on public access to European Central Bank documents (OJ L 80, 18.3.2004, p. 42, ELI: http://data.europa.eu/eli/dec/2004/258/oj) and Decision (EU) 2015/811 of the European Central Bank of 27 March 2015 on public access to European Central Bank documents in the possession of the national competent authorities (ECB/2015/16) (OJ L 128, 23.5.2015, p. 27, ELI: http://data.europa.eu/eli/dec/2015/811/oj).