Constantinos Herodotou: Address - Annual General Meeting of the Association of Cyprus International Financial Firms (ACIFF) Address by Mr Constantinos Herodotou, Governor of the Central Bank of Cyprus, at the Annual General Meeting of the Association of Cyprus International Financial Firms (ACIFF), Nicosia, 10 February 2022. *** It is my pleasure to address the open session of the Annual General Meeting of the Association of Cyprus International Financial Firms (ACIFF) today and present the current situation of the Cyprus and European banking sectors as well as the challenges ahead. I will also try to shed some light on the trends and developments in the banking industry. Let me start with an update on the Cyprus banking sector. We are now almost a decade after the peak of the Financial Crisis in Cyprus and looking at our banks' key financials, we observe a significant balance sheet derisking and an improvement in their loss absorption capacity. This is despite the shocks caused by the on-going pandemic. Specifically, the capital position of our banks, measured through the common equity tier 1 ratio rose from 14,2% at the end of 2014 to 17,2% at the end of September 2021. This is well above the EU average of 15,7%. In addition, during the same period a noteworthy clean - up from non-performing loans has taken place, where troubled loans in the banking sector have been reduced from 28,3bln euros in 2014 to 4,3bln euros in October 2021. Nonetheless, the NPL ratio in the Cyprus banking sector is still high, ca.

Therefore, besides greater financial integration, the other two key pillars of the financial Blueprint relate to collaboration to promote financial inclusion and financial stability within ASEAN. ASEAN financial integration also promotes a gradual and prudent liberalisation of the capital account and it recognises the right of countries to take temporary capital flow management measures should these flows threaten to undermine stability. There is also ongoing work to strengthen regional surveillance arrangements, regional financial safety nets, and the regional crisis management and resolution framework. Therefore, while recognising the benefits of financial integration, there is also awareness of the risks, and this has led to a cautious but progressive approach that we hope would ensure that financial integration indeed contributes to sustainable growth of the ASEAN economies. 2  BIS central bankers’ speeches  Conclusion I will conclude with my view of the role of integration for Malaysia. Since the financial crisis, Malaysia’s growth has become more dependent on domestic demand and less dependent on external demand. While the resilience of domestic demand in the challenging environment is a noteworthy achievement, the reduced contribution of the external sector has clearly pushed Malaysia on to a lower growth trajectory. Since 2007, the contribution of net exports to real GDP growth has been negative with the sole exception of 2014. Over the longer term, the contribution of the external sector will need to expand to support a healthy and sustainable economy. Therefore, for Malaysia, economic integration and strengthening our economic ties with other countries is a necessity.