The total non-government sector deposits (including the demand deposits) are planned to increase by Denar 5,139 million or by 13.6% in 2001. The deposits growth should result from the increased confidence of the economic agents in the banking system, as a result of: •  Stable macroeconomic environment  •  Increased income of the economic agents resulting from the projected acceleration of the economic activity  •  Initiation of bond repayment process of so-called “old foreign exchange savings”  •  Modification in the legal framework regarding the operations of the Insurance Deposit Fund, which has been transformed into a state fund. Moreover, the amount of the insured deposit, and the indemnfication percentage in case of risky event have been increased, as well  •  Increased presence of foreign investors in the banking system of the Republic of Macedonia. Analyzed by currency denomination, in 2001, Denar and foreign currency deposits are projected to increase by Denar 3,139 million, or by 12.0%, and by Denar 2,000 million, or 17.5%, respectively. Namely, following its introduction in the first half of 2002, the Euro will replace the currencies of the EMU member countries. This will result in enhanced Euro conversion of the households' foreign currency deposits currently denominated in these currencies and not deposited in the banking system. Hence, part of the converted savings are expected to remain within the banking system, increasing the foreign currency deposits.

On the other hand, the supervisory authorities will need to strengthen their macro-prudential risk assessment capacities, by focusing more on systemic behaviors of the financial institutions. The central bank is expected to take a larger responsibility in this area, particularly in those countries where it did not use to have a strong supervisory role. Whatever the approach in this direction, the supervisors will need stronger legal powers which will ensure their ability to act in a timely and flexible way. As mentioned also above, procedures for managing distressed financial institutions and for crisis management will need to be revised to ensure stronger and more effective inter-institutional and cross-border cooperation, and in general to better address the potential conflict between ex-ante supervision and ex-post intervention. This important process of financial regulatory reform is not without risks. I believe that the public authorities will pay particular attention to control the tendency for over-regulation, and to avoid a “blind” adoption of the regulatory changes as well as asymmetric/unilateral approach. Regulating more should mean regulating better. Undertaking risks is a natural thing for the financial industry in their valuable role of financial intermediation. Such undertaking of risk, when well identified and properly managed, is useful for increasing efficiency and returns of the activity, two important elements for a viable and solid on-going financial performance. Every country should certainly follow with particular attention the discussion and the changes that are being proposed for the financial regulatory reform, as this process will affect them for sure.