##lity and high uncertainty force a need for optionality in the conduct of monetary policy to ensure price stability over the medium term. it is both interesting and important here to briefly explain the difference in the monetary policy actions employed so far by the ecb and the federal reserve in response to the inflationary shocks. the policy actions of the ecb and the federal reserve, diverge since they face very different economic environments and data. in the u. s., where the federal reserve has already raised rates and delivered today the biggest rate hike since 2000, the inflationary pressure has been made more acute by a tight labour market. in the euro area the labour market is not tight. also, domestic demand in the euro area is back to pre - covid levels. in the u. s., it is higher. therefore, the us is facing demand - side inflationary pressure that monetary policy can deal with. in cyprus, the rise in oil prices has a direct impact on the households'cost of living and firms'production costs while the sanctions imposed on russia mainly affect the tourism and professional services sectors of the country and are expected to weigh on economic activity. specifically, they are expected to reduce the level of gdp growth in 2022, as currently estimated, by around 1, 3 percentage points, from 3, 6 per cent as per the central bank of cyprus december projections, to around 2, 3 per cent. inflation is currently expected to hover around 6, 8 per cent in 2022, compared to the december projection of 2, 5 per cent. this impact is associated with the rise in oil and other commodity prices, as well as the disruption in exports of goods and services to russia, 2 / 5 bis - central bankers'speeches which on average constitute about 16 per cent of overall exports of goods and services. important such services exports to russia include tourism, transportation, financial, professional and computer services. in addition, indirect consequences are expected via the impact on consumer and business confidence. nevertheless, the medium - term economic outlook remains positive, supported by disbursements from the european recovery and resilience fund. the allocation for cyprus for the period 2021 - 2026 is €1, 2bn, of which €1bn in grants and €200 million in loans. the total grants allocation for the eu is €338bn, which implies 0, 3 per cent of the total grants package is allocated to cyprus. in terms of the banking sector of cyprus, it

as well as for the good of the cypriot economy, become better and more efficient at serving their clients. i have made this point to the ceo's and chairmen of the banks a number of times and i also called a meeting between the cbc, economy stakeholders like kebe, institute of certified public accountants of cyprus, the cyprus bar association and the cyprus banks to promote and facilitate better and more efficient ways of doing business with the banking sector. whereas as agreed, follow - on meetings have subsequently taken place 3 / 5 bis - central bankers'speeches between the stakeholders, i'm forced to say that i have not seen practical progress. i call on all parties to continue the discussions but more importantly to move from talking to doing. in order to help this situation as well as the economy, at the cbc we also initiated a project to digitise the banking sector's client onboarding process as well as the exchange of customer information between banks. let me be clear : this is not the responsibility or remit of the central bank. however, i decided for this to happen in order to push this technological change in the banking sector. we set this project as a priority and obtained the commitment of cyprus banks to embrace and participate in the project. we are now at an advanced stage of formulating the technical and legal requirements for the project. the project, as envisioned by the cbc, will be a flexible and scalable solution to be implemented in phases. phase one, will be the remote digital onboarding of new customers through a seamless digitalised process and an optimised customer on - boarding experience, thereafter expediting the remote updating of customer data and information. digitalisation of the onboarding process will initially focus on cyprus citizens, allowing for expansion to include eu and non - eu citizens as well as legal entities and, to the extent possible, similar structures. in other words it will learn to walk before it will run. phase two will roll out an interoperability solution with utility service providers and governmental services, allowing for possible incorporation of electronic ids as provided for in the european regulation. phase three will see the information sharing between participating banks when there is an update of customers'data for aml / know your customer compliance purposes or when a new customer is onboarded and such person is already a customer of a participating bank. finally, phase four will deal with information sharing between participating banks for the purpose of account switching. the cbc is committed to make the project