and related services, while keeping the responsibility for customer onboarding. in parallel, the digital euro would reduce european dependence on the international card payment schemes, that currently process outside the eu most of european retail payments. moreover, since geopolitical developments make us more vulnerable to power outages and cyberattacks, designing the digital euro as a fall - back option such that it relies on infrastructure rails other to those of non - european card - based payments, would enhance the resilience of the european payment ecosystem. the ecb has completed the consultation phase that was launched in october 2021 and lasted two years. based on the outcome of this phase, at the governing council of the ecb we agreed to design the digital euro, such that it would be widely accessible to citizens and businesses through distribution by supervised intermediaries. as from the 1st november 2023, at the governing council of the ecb we approved the launch of the preparation phase, during which we will develop and test technical solutions and business arrangements for our digital currency, as well as finalise the rulebook and select providers that could develop a digital euro platform and infrastructure. the ecb's project has benefited so far from the expertise of european policymakers, and the rapport with market participants, civil society and the general public. the eurosystem will continue this journey with stakeholders and will adjust the digital euro design upon finalisation of the legislative negotiations that are running in parallel. ladies and gentlemen, what i have briefly summarised is a very challenging and ambitious project and objective. however, i am optimistic that it will ultimately bear fruits and benefits, as our european track record has shown that what seems incredulous now, is tomorrow's new norm. let me now turn to our domestic space and say a few words regarding the digital initiatives that we undertook at the central bank of cyprus. in our commitment to advancing the digitalization of the financial sector and fostering an effective financial ecosystem to bolster the economy, as well as to further encourage, promote and support domestic financial innovation, at the central bank of cyprus we recently undertook two important initiatives : the first one is the implementation of a remote electronic digital on - boarding platform for our banking sector. the digital on - boarding platform project is designed to expedite the process for collecting, identifying and reviewing data of current or new bank clients. it will offer 3 / 5 bis - central bankers'speeches incremental advantages to both individuals and corporations. the

constantinos herodotou : current economic dynamics in the euro area and cyprus speech by mr constantinos herodotou, governor of the central bank of cyprus, at the london business school alumni cyprus club event, nicosia, 12 september 2022. * * * introduction i would like to thank the london business school alumni club of cyprus for arranging this event and for giving me the opportunity to participate in such an interesting, constructive, and open discussion. today i will focus on the current economic challenges faced by the euro area and cyprus. i will begin by providing a brief summary of recent economic developments in the euro area, followed by a discussion of monetary policy and how it responds to the new challenges of rising, persistent inflation and economic uncertainty. then i will move on to cover the main developments in the cyprus economy and its banking sector. euro area euro area economic developments starting from the euro area, a post - pandemic spending, fuelled by government expenditure, was expected to boost economic activity in 2022 and help households and businesses to rediscover stability after two difficult years. all of that changed when russia invaded ukraine. as a result, gdp is growing at a much slower pace this year than previously expected. growth is hampered by soaring energy and commodity costs, low confidence and supply chain disruptions. at the same time, inflation is approaching double digits, and a winter with possible energy shortages is on the horizon. nevertheless, a recovering tourism industry, decreasing unemployment, and eu funding payments all help to boost activity and limit, to some extent, output loss. more specifically the euro area quarterly economic growth reached 0. 8 percent in the second quarter, following a 0. 7 percent rise in the first quarter. even though these growth rates are below the rates expected before the start of the war, the 0. 8 %, growth is still the strongest performance in three quarters, prompted by the easing of covid restrictions and the good summer tourism season in southern countries. the impact from war developments is expected to be shown in the data of the fourth quarter of 2022 and the first half of 2023. this outlook is reflected in the latest ecb projections for economic growth, which have been revised down markedly for the remainder of the current year and throughout 2023. the euro area economy is now expected to grow by 3. 1 percent in 2022, 0. 9 percent in 2023 and 1. 9 percent in 2024, compared to the december 2021 projections of 4, 2