a green economy comes at a cost and this will affect the banks through various channels, the most prominent one being their exposure to businesses that produce high carbon emissions. it is therefore of paramount importance for banks to develop appropriate strategies and risk management practises to alleviate the longterm, direct and indirect, effects of climate change. from the regulatory perspective, we are conducting for the first time a climate related stress test for the significant eu bank institutions and we are also planning to carry out both on site and off site inspections to assess the readiness of the banks to deal with this type of risks. let me be clear ; both banks and supervisors are still on the learning curve with regard to climate - related and environmental risks. however, we both need to adapt and we need to adapt as soon as possible. the second emerging risk, is the it and cybersecurity risk. the constantly increasing employment of digital strategies by banks which has been boosted further by the pandemic and the banks'increasing dependence on it infrastructures raises the need and the requirement to constantly enhance their protection against cyber threats. according to the bank of international settlements as well as the international monetary fund the financial sector ranks high in frequency of cyber security events when compared to other sectors and these events have tripled over the last decade. the interconnectedness of the financial system means that a successful attack on a major 2 / 5 bis - central bankers'speeches financial institution may spread rapidly through the financial system with potential adverse effects on the stability of economies. in addition to the risks mentioned above, banks are also facing increasing competition emanating from new entrants in the market. for example in cyprus, there are currently 15 authorised electronic money institutions and 10 authorised payment institutions. but that number is likely to change dramatically. there are currently at the central bank of cyprus 44 pending licencing applications ( 33 emis and 11 pis ), which is twice the figure compared to the applications pending only a year ago. notably, this number is significantly higher than the 11 local and foreign authorised banks and subsidiaries in our country. in the last few years, payments services regulation has allowed a number of payment institutions to make use of the banking industry's interfaces for accessing payment service users'accounts online. these fintech companies, which possess some advantages over traditional banks such as state - of - the - art technology and no legacy operating infrastructures, have taken advantage of the opportunities offered by payment services regulation and exert additional

, a parallel impact is that it has also intensified the upside risks surrounding the inflation outlook, especially in the near term. based on the same imf forecasts, euro area inflation in 2022 is expected to reach 5, 3 per cent, compared to 1, 7 per cent projected by the imf back in october 2021. core euro area inflation, as measured by hicp excluding energy and 1 / 5 bis - central bankers'speeches food rose from 2, 7 per cent in february to 3 per cent in march 2022 with an increase in the sectoral inflation rates for both non energy industrial goods and services. all - items hicp reached 7, 5 per cent in march from 5, 9 per cent in february. the rising inflation, is increasing the production costs of firms and is eroding disposable income. the war has heightened the uncertainty of future price developments and the pace with which supply bottlenecks will recede. in parallel, new pandemic restrictive measures in china, for example the closing of the city of shanghai and its port, which is considered the busiest port in the world, also accentuate supply chain difficulties. energy prices, which were driven even higher after the outbreak of the war, now stand 45 per cent above their level one year ago and continue to constitute the main reason for the high level of inflation. overall, inflation pressures are projected to remain strong in the shortterm undermining business and consumer confidence. the main challenge for monetary policy now is to control inflation without jeopardising economic recovery. this requires careful attention of all these elevated uncertainties and their implications on the evolving economic outlook. the complication is that the inflation pressures result mainly from the supply side shocks which cannot be remedied via monetary policy. higher interest rates will neither restore supply chains nor reduce energy prices. for this reason, at the ecb governing council, we have already began adjusting certain monetary policy instruments such as the pandemic emergency purchasing programme and the asset purchasing programme, reducing significantly the bonds bought by the national central banks of the euro area members states. in other words monetary tightening has already begun. there is a clear sequencing of monetary policy actions that has been set and is being followed by the governing council. we closely monitor all incoming data and adjustment of the ecb monetary policy instruments will be done gradually and flexibly to target any demand side or second - round inflationary effects or de - anchoring of inflation expectations. the volati