Risks to projected HICP inflation rates in the coming years are seen to be still broadly balanced, with upside risks in the near term mainly stemming from higher than expected oil prices and indirect tax increases. However, downside risks continue to exist owing to weaker than expected developments in economic activity. The monetary analysis indicates that the underlying pace of monetary expansion remains subdued.
While banking authorities are committed to adapt and to be accommodating for Islamic finance within the European regulatory framework, it is crucial to require the same licensing and supervision standards from Islamic financial institutions as expected from conventional banks. 7 Real challenges however remain on the legal side for example asset transferability.