The eurozone is at risk from unduly low inflation, the governor of the French central bank Christian Noyer, who also sits on the policy body of the European Central Bank, warned on Monday.
A second challenge for the eurozone is the strength of the euro, which was "one of the factors pushing inflation down," Noyer said.
But "low inflation does not mean deflation", Noyer underlined, saying that deflation meant "a pernicious spiral" marked by a "permanent and cumulative process" of falling prices.
Inflation in the eurozone fell from 2.7 percent at the end of 2011 to 0.5 percent in March on a 12-month comparison, the central bank noted.
The ECB has a target for medium-term inflation of just below 2.0 percent.
There is widespread concern that deflation, an absolute fall in prices, threatens the eurozone and the ECB central bank has said that it is watching these pressures carefully and is ready to take counter measures.
Economists hold that deflation is particularly dangerous if it takes hold because consumers and businesses delay purchases in the belief that prices will fall further.
This further depresses demand and prices and pushes up unemployment, and can creat a vicious circle.
Noyer, presenting the French central bank's annual report, warned of the pressures of disinflation, which happens when the rate of inflation slows sharply.
Reforms by several governments in the eurozone to cut public budget deficits and debt, and a rise in the competitive position of some eurozone countries, had combined to create "powerful disinflationary pressures", Noyer said.
The big challenge for the 18-member eurozone was "the risk of inflation which is too weak for a lasting period", he said.
"Temporary and global factors are at work, import prices are falling, particularly for raw materials and energy," he said in a letter with the annual report for French President Francois Hollande, and for the French Senate and National Assembly.

Nine borrower-directors of Grameen Bank yesterday rejected Finance Minister AMA Muhith's recent comment on the transparency of the electoral process at the microlender.
Muhith on Saturday said Nobel laureate Prof Muhammad Yunus had picked the directors through a so-called election in the last 30 years, terming the process an utterly undemocratic practice.
“To stop this undemocratic practice, the new rules have entrusted Bangladesh Bank with power [to hold the elections],” the minister said.
In the first week of this month, the government issued the new Grameen Bank (Election of Directors) Rules 2014, giving the central bank the authority to hold elections to pick nine independent directors. Before this, Grameen Bank officials used to conduct the elections.
"We are very surprised at the comment of the finance minister. We are also surprised to see the ignorance of the minister on how the election to the governing body is held," the nine directors said in a joint statement.

In the last three decades, the election for the nine directors from the members of the bank has been held under the rules scripted by the government. So far 10 elections were held, electing borrower-directors for three years in each term.
The statement said the government-appointed chairman and two other directors to the 12-member board have always attended the board meeting during elections.
"They have always praised the elections and welcomed new board members," it said, adding that there was no way for Prof Yunus to hand-pick people for the board.  
The nine directors have to face elections at branch, area and zone levels before being elected.
The statement said the government has kept the rules almost the same, except taking away power from Grameen Bank to organise the elections.
"Someone might be determined to destroy Grameen Bank. The law was changed as it had not been possible to ruin the bank with the help of the law of Grameen Bank," the directors said.
The elected directors said the process to nationalise the bank has started with the new law.
"The previous law did not allow the government to take the control of the bank in its hand."
The 86 lakh members and borrowers of Grameen Bank own 75 percent share of the Nobel Peace Prize winning bank, while the government controls the rest.
The nine directors said there was no way the election process would take a political shape, given the way the election commission will be formed and the polls under the supervision of the central bank be conducted.
"Partisanship, violence and money will make their way into the elections. As a result, Grameen Bank will be destroyed. Indiscipline will affect lending and deposit collection," the directors said.

1st Managers’ conference-2014 of Greater Chittagong Region of Pubali Bank Limited was held at BGMEA Building recently. Managing Director & CEO Helal Ahmed Chowdhury has graced the conference as chief guest while Additional Managing Director M.A. Halim Chowdhury was present as special guest, reports in press release. Deputy Managing Director Safiul Alam Khan Chowdhury presided over the the conference. In his speech Managing Director Helal Ahmed Chowdhury stressed on selection of potential borrower and try to enhance bank business. He advised all to work hard to increase remittance rendering best customer services. He underscored the need for increased utilization of the modern Information Techninlogy for qualitative improvement in the overall customer service as the bank has to operate in a highly competitive Banking sector. Managing Director impressed upon the officials to increase overall foreign exchange business. Additional Managing Director M.A. Halim Chowdhury impressed upon the officials to increase overall foreign exchange business in order to cope with the changes in the environment of the global banking sector. In his speech Safiul Alam Khan Chowdhury advised all to work hard, look for new business avenues and adopt diversification and to take concerted efforts for achieving the target. General Manager of Chittagong Principal Office Syed Abdul Mazid, DGM & Regional Head of Chittagong North Md. Omar Sultan and DGM & Regional Head of Chittagong South Shah Newaz Khan were also attended at the conference.

Bangladesh Bank (BB) will introduce Shariah-based refinancing scheme for Small and Medium Enterprises (SMEs) and other thrust sectors, Governor Dr Atiur Rahman told a seminar on Sunday, reports BSS.
Referring to the Shariah compliant mode of refinance support from BB’s Export Development Fund (EDF), the governor said introduction of similar Shariah compliant refinance support against SMEs and other thrust sector lending by Islamic banks is also underway. Dr Atiur was addressing the seminar on “Shariah Banking: Bangladesh Perspective”, organised by Islamic Banks Consultative Forum (IBCF) at a city hotel.
State Minister for Finance MA Mannan, and Islami Development Bank (IDB) President Dr Ahmad Mohammed Ali also addressed the seminar.
Eminent Islamic banking expert Azizul Huq presented the keynote paper on Shariah-based Islamic banking, signifying the growing role of Islamic banking in socially responsible financing of trade and output activities in the country’s economy, including underserved and un-served sectors like agriculture and Micro, Small and Medium Enterprises (MSMEs).
Speaking on the subject, the governor said Shariah-based Islamic banking already constitutes about a fifth of the country’s banking sector.
As mentioned in the keynote paper, Dr Atiur said BB acted early on towards introduction of a government Islamic investment bond of six-month tenor to facilitate liquidity management of Islamic banks; introduction of 
another similar instrument of three-month tenor for further facilitation is at the final stage.
He said the central bank already issued guidelines for Islamic banking in Bangladesh using an approach that delegates to the Shariah-based financing community the self-regulation and oversight of its Shariah compliance practices.
“This has served well in providing a level playing field for Shariah-based financing alongside the conventional options,” Dr Atiur said.
He hoped to see more of Islamic financing in the participatory risk sharing “Musharaka” and “Murabaha” financing modes, particularly for MSMEs and “green” or environmentally benign ventures, rather than in the non-participatory “Mudaraba” and “Ijarah” modes.