15,2% as at October 2021. Although this has been drastically reduced from the peak of 48% back in 2014, it is still well above the EU average of 2,1%. Therefore the efforts for further deleveraging must be continued. The liquidity position has also improved. The level of deposits is currently at the highest level ever recorded since 2014, amounting to 51,5b Euros with the reliance on domestic depositors climbing to 82% as opposed to 70% in 2014. This adds to the resilience of the deposits base since these depositors are associated with a more predictable and stable behaviour. The Liquidity Coverage Ratio, indicating the availability of liquid funds against deposit outflows over a 30 day stressed period, stood at the level of 313% in December 2021 which is more than 3 times higher than the minimum requirement of 100%, placing Cyprus amongst the most liquid banking sectors in the Union, where the average LCR amounts to 175%. At the European level, including Cyprus of course, the banking sector faces a number of challenges. The profitability prospects of banking both in Cyprus as well as across the EU remain challenging. But why is profitability an area of interest for regulators? A sustainably profitable banking sector is necessary to build buffers to absorb unexpected losses, like the ones we have seen recently due to the pandemic. It also enhances further the ability to provide viable lending to businesses and households alike, contributing to the efficient functioning of the real economy.

Artificial intelligence and robo-advisory, distributed ledger technology and smart contracts, data analytics and cloud computing, are only some examples of the available technologies to build the digital bank of the future. Of course, as supervisors, we need to make sure that financial stability and prudential soundness are preserved, while at the same time allowing for technological innovation. Dedicated interfaces (or Application Programming Interfaces as they are widely known), need not remain just a regulatory requirement for banks, built to "tick-the-box". These interfaces, could prove to be much more than just a regulatory requirement to serve payment institutions, due to their ability to seamlessly integrate banking services into an e-commerce experience, providing additional outlets for banking products and opportunities to enhance one's customer base. Their "open architecture" nature enables such services to become scalable and economically sustainable even when they are offered through small e-commerce sites with a limited sales volume. In addition to rationalising the cost structure, banks need to identify avenues to enhance their income capacity. 4/5  BIS - Central bankers' speeches  Last, but no least, consolidation can further enhance efficiency through reaping costcutting synergies created through economies of scale. Nevertheless, this will be determined by market forces and the shareholders of credit institutions. Let me now conclude. The transformation of banks' business model towards digitilisation may give them the opportunity in the long term to enhance their profitability by rationalising their cost structure and providing more efficient, tailor - made services to their customers.