It is therefore important for our banks to continue the enhancement of the quality of the asset side of their balance sheets, bridging the gap with our European peers. European Banks are also facing emerging risks beyond the traditional business model risks I just mentioned. I will focus on the three I consider as the most prominent ones. The first one is the exposure to climate-related and environmental risks, which will be one of the main concerns for both supervisors and banks in the years to come. The transition to 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.
15,2% as at October 2021. Although this has been drastically reduced from the peak of 48% back in 2014, it is still well above the EU average of 2,1%. Therefore the efforts for further deleveraging must be continued. The liquidity position has also improved. The level of deposits is currently at the highest level ever recorded since 2014, amounting to 51,5b Euros with the reliance on domestic depositors climbing to 82% as opposed to 70% in 2014. This adds to the resilience of the deposits base since these depositors are associated with a more predictable and stable behaviour. The Liquidity Coverage Ratio, indicating the availability of liquid funds against deposit outflows over a 30 day stressed period, stood at the level of 313% in December 2021 which is more than 3 times higher than the minimum requirement of 100%, placing Cyprus amongst the most liquid banking sectors in the Union, where the average LCR amounts to 175%. At the European level, including Cyprus of course, the banking sector faces a number of challenges. The profitability prospects of banking both in Cyprus as well as across the EU remain challenging. But why is profitability an area of interest for regulators? A sustainably profitable banking sector is necessary to build buffers to absorb unexpected losses, like the ones we have seen recently due to the pandemic. It also enhances further the ability to provide viable lending to businesses and households alike, contributing to the efficient functioning of the real economy.