##ly challenging environment, as well as on the cbc's own initiatives, acting proactively and fostering enhancement within the financial sector. linked to this, i would like to briefly provide an overview of the'international headquartering'trend in cyprus. international company headquartering has traditionally been a strategic decision influenced by factors such as tax benefits, access to key markets and infrastructure facilities. 4 / 5 bis - central bankers'speeches in cyprus, foreign direct investments, as a result of the inflow of a large number of foreign companies, contributed to the strengthening of economic activity in 2022. in particular, it has supported the inflow and expansion of operations of companies, mainly in the information and communication technologies sector. the contribution of headquartering to gdp growth has doubled, from 0. 7 percent in 2021 to 1. 3 percent in 2022. however, we should bear in mind that with the rise of the digital era, the emphasis on physical location is waning. talent acquisition, a crucial component for a company's success, is no longer confined by geographical boundaries. this shift is further intensified by the growing number of digital nomads, professionals who operate remotely and are not tethered to a specific location. these professionals prioritize flexibility, connectivity and work - life balance, and as a result organizations are rethinking their traditional operations model in order to attract this pool of global talent. the intertwining of company headquartering strategies, with the allure of remote work opportunities, showcases the evolving landscape of the modern business world. let me now conclude, innovation in the financial sector has become a crucial necessity. it enables contactless banking, it offers financial services'employees the possibility to work remotely, and provides a customer oriented efficient product. undoubtedly, technological advancement comes with challenges and risks. these risks need to be effectively managed and regulated, so that financial sector participants and their customers reap the benefits of such technological advancement. let me assure you of the central bank of cyprus'support to all efforts that point towards the direction of technological advancement and of our readiness to contribute within the framework of our legal mandate. 5 / 5 bis - central bankers'speeches

constantinos herodotou : navigating the technological revolution the central banker's perspective speech by mr constantinos herodotou, governor of the central bank of cyprus, at the 11th banking forum & fintech expo, nicosia, 7 december 2023. * * * ladies and gentlemen, esteemed guests, it is a pleasure to have the opportunity to speak to you at today's event, and i wish to thank the organisers for the invitation. in our increasingly digitalized world, technology's pervasive influence has brought about significant changes, particularly in the financial sector. the integration of technology into banking processes, has the potential to optimize operations, improve customer experience and redefine interactions between financial institutions and clients. the entry of fintechs and the expected challenge from big techs, has expedited these changes, using platforms like social media to influence retail depositors'responses to market signals. without a doubt, payments are being challenged by disruptive transformation and by the emergence of private actors that might lead to instability and confusion about what is money and what is not money. for example, the so - called crypto - assets are too volatile to be considered a currency or to act as a means of payment. stablecoins are often unbacked by any reserves to be considered as a currency, but rather seek to maintain a stable value through, for instance, algorithms or protocols. moreover, stablecoins are vulnerable to runs, as evidenced in may 2022 by the collapse of terra, which was the fourth - largest stablecoin at the time. another example occurred in march 2023, following the failure of silicon valley bank, by investor runs on usd coin – the second - largest stablecoin. ladies and gentlemen, as bigtechs are further expanding into digital finance, there are risks to our payment system, as well as to our monetary and financial stability, especially from a potential issuance of their own currency. this is not mere speculation, as evidenced by the decision of paypal to launch its own dollar - denominated stablecoin. paypal has a user base 1, 3 times bigger than the eurozone's population therefore such a venture poses challenges at least under three areas : a ) firstly, to the functioning of our payment system. stablecoins are structured as'closed - loop solutions'that restrict payments to users who adopt a particular payment tool. b ) secondly, if citizens prefer to use