Latest Eurostat's flash estimate data revealed that Cyprus HICP is expected to reach 9,6% in August 2022 compared with 3,3% in August 2021. 4/6  BIS - Central bankers' speeches  Taking into consideration the said inflation developments, we expect that our domestic short-term inflation outlook will continue to remain, overall, at very elevated levels, similar to the euro area inflation developments, amid the ongoing significant uncertainty and volatility resulting from the Russian-Ukraine war. More specifically, Cyprus HICP inflation for 2022 has been revised upwards in our most recent projections, reaching 8,4% compared with 7,0% in the CBC June 2022 economic bulletin. Banking sector Now let's consider the developments in the Cyprus banking sector. Data from the sector demonstrates that despite the negative international economic environment, the Sector is proving resilient, exhibiting a solid and healthy financial standing. The solvency position, as measured by the Common Equity Tier 1 ratio was edging up to 17,5 percent in the second quarter of 2022, a level higher than the respective European average of 15,2 percent. The Liquidity Coverage Ratio, indicating the availability of liquid funds against deposit outflows over a 30 day stressed period, stood at the level of 320 percent in July 2022 which is more than 3 times higher than the minimum requirement of 100 percent, placing Cyprus amongst the most liquid banking sectors in the Union, where the average LCR amounts to 168 percent.
Facilitating the integration of fintechs into the regulatory framework As regards the fostering of innovation, I would first like to recall a founding principle. As supervisors, we need to promote a regulatory framework that is innovation-friendly, but technology-neutral, in order to encourage the appropriate and uniform treatment of risks: the same activity, same risk, same rule principle. Last year, I drew a parallel with the invention of the railway, which was a major innovation in the 19th century but not devoid of risks. Our role is to prevent the train from going off the tracks and to ensure that passengers are happy to get on board without being afraid. In other words, we need to promote innovation but also confidence in 1/3  BIS central bankers' speeches  innovation. At the European level, the balance between innovation and security is embodied in the first draft texts of the digital finance package, presented by the European Commission in September 2020. The draft Markets in Crypto-Assets Regulation (MiCA) constitutes a first step forward. I would like to stress two key points: it must be adopted quickly, and it must be consolidated. Indeed, technology is advancing rapidly, and decentralised finance, which is an even more crucial area than in September 2020, must be taken into account to avoid leaving any blind spots or allowing alternative circuits to develop without regulation. The draft DORA Act focuses on the key issue of operational resilience, which is vital, notably to address cyber risk.