is developed. all developed countries are challenged with increased transparency and improved consumer education, and their central banks, from ecb, bank of england and the fed, keep reiterating their significance. i truly believe, and my belief is based on discussions with hundreds of financial services consumers, that banks need to be more proactive in their public relations in order to change the image of the banking profession. banks have to respond to all criticism, comments and complaints, they have to defend their line of business and, above all, they have to provide full information to their clients. in this respect, i welcome the asb ’ s code of professional banking conduct which sets a good example of self - regulation, and at the same time, reduces pressures on the national bank as the regulatory authority. nevertheless, the nbs will continue to insist on disclosure of the effective interest rate, education of bank clients, as well as on fast and efficient processing of customer complaints! 4. nbs regulations six years of transition and the current level of development of the banking sector call for another systematic review of all nbs regulations. another reason for such general review is the introduction of basel ii in serbia. it is expected that this strategy will be implemented primarily through banks with adequate risk management system and using it as a platform for more efficient risk management in their home countries, i. e. eu member countries. the review of the regulatory framework should go in three directions : • commercial banks ought to be given greater flexibility in assessing their risks exposure ; • the number of reports submitted to the nbs and the frequency of their submission have to be rationalized, • regulations in the area of supervision should aim primarily at liquidity and solvency of the banking sector, and not at macroeconomic issues. needless to say that communication and mutual understanding are essential to the success and that the above revision has to be done in full cooperation with commercial banks. unfortunately, stability is valued in serbia only once it is lost! events of the second week of may and an unexpected flashback into the nineties which, thank lord, lasted for several days only, proved that there are no guarantees and that politics has a significant impact on movements in the exchange rate of the dinar and on the stock exchange. i sincerely hope that not only the citizens and all institutions, but politicians as well, will all learn a good lesson from events of that notorious week. all of us in the nbs most certainly have! the last, but not least

market. however, these signs were still fairly new and i personally found reason to await further information to confirm this picture before i was prepared to take action. thus, at the meeting, i stressed the importance of monitoring that economic activity was strengthening as expected and also monitoring how supply conditions were developing in the period ahead in order to ascertain whether a repo rate cut in february would be warranted. as i see it now, the data that has been received since december has largely confirmed the picture of international and domestic economic activity that was presented in the inflation report. we are some way into a cautious upswing both in the world economy and the swedish economy. there is possibly a risk that labour market conditions in sweden could result in a somewhat weaker economic upswing than we expected, mainly in the current year. as regards the view of domestic cost pressure, there are reasons to be somewhat more optimistic. it appears possible that the rate of wage increases could be slightly lower. at the same time, productivity was unexpectedly positive last year. inflation in november and december has also been slightly lower than we expected in our last forecast. one of the risks of higher inflation that we stressed - that rises in electricity prices would filter through to other areas of the economy - also appear now to be somewhat lower. this is both because electricity prices have fallen sharply and that those rent negotiations that have been concluded have not resulted in such high outcomes as could have been feared. so it is a case of small adjustments to our assessment on a few points that, on the whole, imply somewhat lower inflation. but as the inflation outlook as early as december was judged to be fairly benign, even a small revision as i now see it could be significant for the monetary policy decision we will make at the beginning of february. by way of conclusion, there is, as always, reason to underline the fact that new data is being received every day and that any decision on interest rates at the next monetary policy meeting can not be made now. this must be taken in the light of all the information that is available at the time. for my part, i will also look forward with great interest to what my colleagues have to say. thank you.