2022 and the implications of the ecb monetary policy the banking sector of cyprus has enhanced its resilience further and retained a solid financial standing throughout 2022. the liquidity of the banking system stands at high levels compared to other eu countries, with the liquidity coverage ratio at 310 % as at december 2022, almost double the eu average of 161 %. its loss absorption capacity, the common equity tier 1 ratio, stood at 17. 7 % as at december 2022, which is also above the eu average of 14. 96 %. moreover, the banking sector's profitability reported significant profits in 2022, with the increasing interest rate environment being the key contributor to this. the recent episodes with a number of failing regional american banks and credit suisse have reminded us that we should all remain vigilant. our banking sector has successfully weathered the shocks of these recent events so far. however, contagion 2 / 4 bis - central bankers'speeches risks have been elevated globally as a crisis event in a non - systemic bank in the us, such as svb, caused market volatility and ripple effects in other continents. the eurozone mandatory supervisory restrictions with regards to the banks'continuous management of concentration risks on assets as well as financing, has proved to be once again best practice for risk management purposes. the ample liquidity of cyprus banks in conjunction with cbc's preventive measures in 2021 to manage concentration risks, reinforced the banks'actions towards diversification making them stronger and capable to face any similar events. however, there is no room for complacency. the elevated levels of inflation, in combination with the increasing interest rates, are expected to reduce net household income, hampering borrowers'repayment ability. consequently, loan portfolios bear elevated risks that need to be properly managed. in this respect, the cbc has mandated a consortium of experts, comprised of international, well reputable companies, to carry out a project with the ultimate goal of maintaining and further strengthening the economy's financial stability. the scope of the project is the formulation of a national systemic solution that could contribute to a further reduction of existing and new non performing loans in the cyprus banking system. this effort is of prime importance for an additional reason ; the progress achieved in de - risking the banks'balance sheets by reducing the amount of nonperforming loans in each bank, has been heterogeneous across banks. most of the progress has been achieved only

the technology that would support the design of the digital euro, is paramount for retaining its key characteristics as a public good - in other words as a fully - edged currency, backed by strong trust, which is the foundation of the european economic and monetary union. the aim is to make the digital euro inclusive, serving 347 million people in the euro area. it would be free of charge and a truly european solution for day - to - day payments : online, in shops or from person - to - person, with wide usability and accessibility from finland to greece and from portugal to cyprus. it would offer high privacy levels and offline use. nowadays, no other means of payment offers all these characteristics at once. ultimately, trust in the digital euro will be the same as in cash, of equal value to the cash euro, as it will be issued and guaranteed by the ecb and not at the level of the member state, thereby distinguishing it from a typical bank deposit. in effect, the digital euro would be a unique payment instrument, combining features of digital means of payment with the most - valued characteristics of cash. the digital euro would not be a threat to the role of banks as financial intermediaries. the remuneration and quantity constraints per person, would stop the digital euro from competing with banks for deposits. besides, the design of the digital euro is for providing a means of payment only – not a means of speculative value play as is the case for the so - called crypto - assets - and banks could constitute an integral part of the digital euro payment solution, through for example their front - end services. the central bank will not interact directly with end - users. 2 / 5 bis - central bankers'speeches if the ecb's governing council decides at the end of the process to introduce the digital euro, following the completion of the preparatory and legislative phases, the digital version of our currency will address some of the challenges brought about by the technological revolution. it would contribute to europe's strategic autonomy, by providing payment service providers a platform for innovation, immediately scalable at european level. the payment solutions currently available in many european countries have not achieved a pan - european dimension, thus citizens cannot fully harness their benefits. unlike digital platforms and e - payment solutions such as paypal, the digital euro's platform would stimulate innovation from banks and spur competition amongst them. in addition, a digital euro would allow banks to maintain their customer relationships and handle digital euro payments