ABSTRACT
With emphasis on the harmonization of the Cyprus laws and practices with the Economic and Monetary Union (EMU) and Capital movements acquis, this chapter focuses on the changes in the laws, the difficulties encountered in the process and the implications emanating from the transposition of the aquis. Three distinct preparatory phases on the adoption of EMU acquis can be identified, namely: pre-accession phase, accession phase, and final Euro phase. Participation of new member states in the Eurozone will be decided upon compliance with the conditions for the adoption of the single currency. The Central Bank of Cyprus (CBC), in an attempt to modernize the operational framework of monetary policy and adjust to European Union (EU) norms, has moved away from the use of direct instruments for controlling liquidity in the economy in favour of market-based tools. The EMU and free movement of capital constitute the peak of the development of the unification procedure in the economic evolution of Europe.
