Cypriot Pound (CYP)

What Was the Cypriot Pound (CYP)?

CYP was the currency abbreviation for the Cypriot pound, which was the national currency of the Republic of Cyprus, prior to its adoption of the common euro currency.

Understanding the Cypriot Pound

The Cypriot pound was the official currency for Cyprus prior to its membership in the European Union (EU) and adoption of the euro (EUR) as legal tender in 2008. The Central Bank of Cyprus issued and administered the currency following its establishment in 1963. The British first used the pound in Cyprus in 1879, even though the country at the time still belonged to the Ottoman Empire. The Cypriot pound remained pegged to the British pound (GBP) until 1972, at which point the central bank changed the peg to the U.S. dollar.

Starting in 1973, the Cyprus dropped its dollar peg in favor of a peg to a currency basket based upon the country's imports, then switched to a currency basket based on the country's trading activities in 1984.

The decision to move to the euro eventually triggered establishment of a permanent exchange rate of 0.585274 Cypriot pounds per euro. The euro became legal tender effective Jan. 1, 2008. The agreement with the European Central Bank allowed exchange of older pound coins for two years following the changeover and CYP banknotes for the 10 years following.

Cyprus had annual GDP growth of 3.23% in 2019 with an inflation rate of 0.56%.

A Divided Cyprus

Britain annexed Cyprus as a colony following the breakup of the Ottoman Empire in 1925. The nation's inhabitants, however, generally have viewed themselves as either ethnically Greek or Turkish, leading to periods of civil unrest. Greek Cypriots have periodically called for the country to unite with Greece, while Turkish Cypriots have traditionally demanded that the country either unite with Turkey or that the northern part of the country secede. The republic received independence from England in 1960 and almost immediately plunged into periodic violence between Greek and Turkish elements. A coup backed by the U.S. and Greece attempted to assassinate the Cypriot president in 1974 and the resultant fight led to the country's division as Turkish forces entered the northern part of the island.

Turkish Cypriots attempted to formalize the division in 1983, when they declared themselves the Turkish Republic of Northern Cyprus. Other than Turkey, however, no other nation has recognized the republic. Northern and southern factions have tried on multiple occasions to forge a peace plan between the two sides, without result. The north remains occupied and the United Nations oversees and patrols a demilitarized buffer zone between the two territories.

Despite the north's technical existence as part of the island of Cyprus, it has maintained the Turkish lira (TRY) as its official currency, though businesses serving tourists often accept payments in euros (EUR), British pounds (GBP) or U.S. dollars (USD).