Anita Angelovska Bezhoska: The importance of savings for investment growth Speech by Ms Anita Angelovska Bezhoska, Governor of the National Bank of the Republic of Macedonia, on the occasion of the World Savings Day - celebration of the Macedonian Banking Association, Skopje, 30 October 2018. * * * Dear Guests, Ladies and Gentlemen, It is a great honor and pleasure for me to address you at today's event marking the World Savings Day - a day that banks and financial institutions around the world dedicate to promoting saving and raising awareness of the public about the benefits it brings. The saving is undoubtedly important from the aspect of both, individual and overall economic progress and maintenance of the macro financial stability. For each individual, or family, it is the principal and the most important step towards providing financial stability in a long run. By saving, we protect ourselves from unpredictable changes in the personal income dynamics, we more efficiently plan the longterm investments and we build sound foundations for maintaining stable finances throughout the lifetime. Saving is also beneficial for the entire society, as it is one of the key factors which the economy’s investment level depends on, which is a prerequisite for boosting the long-term economic potential. Usually, a significant portion of the savings is channeled into the banking system thus providing stable sources of financing to domestic banks, which is particularly important for the bank-centric financial systems, such as the Macedonian one, where the banks act as major financial intermediaries.

When borrowers discover that prospects are not as bright as before, they will become more cautious. So, if anything, Norwegian household debt will be reduced, perhaps not in absolute terms, but at least relative to income. The higher the level of initial debt, the greater the risk to the Norwegian economy. A sudden debt correction would then be more likely, potentially resulting in a sharp fall in GDP. When economic conditions deteriorate, good credit becomes bad debt. Households will then deleverage and cut back on consumption, adversely affecting businesses. It will then take time for growth to recover, as we are witnessing in many European countries that continue to struggle following the financial crisis. Norway has a well-equipped toolkit for counteracting crises. There is room for manoeuvre in monetary and fiscal policy. Norwegian authorities have also introduced a number of measures to reduce the vulnerability of the economy to shocks, especially in the wake of the financial crisis in 2008 and 2009. Banks are required to hold more equity and more liquid assets, which strengthens banks’ resilience. Borrowers are also regulated. The regulation on requirements for new residential mortgage loans was first introduced in 2015. The regulation limits the level of debt a household can take on, reducing the number of vulnerable households. Recently, limitations on consumer credit have also been introduced. Together with room for manoeuvre in fiscal policy and a gradual normalisation of the policy rate, we may believe that these measures will be sufficient to avoid a new crisis.