. access to central bank money or asset swaps should, as far as possible, encourage banks to manage liquidity risk prudently. without the correct pricing structure, the incentives to encourage future risk taking are obvious and potentially large. valuation margins – or haircuts – are used to protect our balance sheet. by themselves, they aren ’ t sufficient to create a general pricing structure. the cost imposed by a margin depends primarily on the difference between the costs of secured and unsecured funding, and that will vary across banks and over time. so the key is in the interest rates charged by the central bank. the second challenge is to overcome the ‘ stigma ’ problem that has plagued the use of central bank facilities throughout the crisis. commercial banks have feared that, by accessing funding from the central bank, they would acquire a ‘ black spot ’ in the market. they have been reluctant to come to their central bank unless in good and extensive company. these are challenges that all major central banks are grappling with. they will not be easy to overcome. but with our international colleagues we are aiming to devise a framework that does so. the prize will be an integrated framework, covering all our lending to the banking system and one that i hope, by making clear the terms on which liquidity will be provided in times of stress, will focus the minds of banks long before those stresses emerge. during my second term as governor i would like to see us establish a framework for financial stability that is on as sound a footing as the one we have successfully established for monetary stability. the measures i have described would go a considerable way to achieving that. but just as no framework for monetary policy can prevent shocks from hitting the uk economy, we need to think carefully about why financial crises have been both persistent and damaging. that leads me to one final thought on which i want to end. for reasons of historical accident we have created over many decades a financial system in which the incentives to monitor risk - taking have been sharply reduced. it is often said that the role of a central bank is to take the punch bowl away just as the party is getting going. that approach has served us well in monetary policy. but all those efforts will come to naught if the opposite applies to the financial sector. if banks feel they must keep on dancing while the music is playing and that at the end of the party the central bank will make sure everyone gets home safely, then over time the parties will become

allow for non - eu exports. is it safe to assume that the growth factors mentioned previously are a result of the economic zones established within macedonia? yes, most of these fdis in production of tradable goods and their resulting benefits to the overall macedonian economy are located within the economic zones. we have been speaking about the eu and its effect on macedonia ’ s economy. compared to the us, if only marginally, the eu is experiencing a more stagnant rate of growth. you mentioned you see the eu beginning to recover slightly. what is your outlook on the future of the euro zone? this is true ; the us is ahead in terms of growth. the eu economy in q2 of this year went out of recession but remains in a fragile state and questions certainly remain regarding its long term stability. they are not out - of - the - woods yet but are heading in that direction. so, although growth will not be very strong i do not see them entering a recession again. even the hardest hit southern european and mediterranean countries have the potential to see growth as early as next year. which is a positive indicator for our more traditional export firms ; as several of these countries act as their largest trading partners. our confidence is building. if this year we will see a 2. 2 % increase in overall growth we predict next year can yield 3. 5 % and it can certainly grow from there to over 4 % in ensuing years. first - movers entering this market will be the ones benefiting from the immediate and privileged market access do you see macedonia ’ s current inability to enter the eu due to the naming dispute with greece as a component that is putting a relative cap on the growth figures you just mentioned? if we look from an economic point of view, judging from rating agency criteria that takes into consideration political uncertainties such as the ongoing naming issue, it is safe to assume that our rating is lower than what it could be. the resolution of this dispute and the resulting bis central bankers ’ speeches increase in rating will certainly lead to greater investor confidence as well as better terms on financing in the international markets. there would also be access to more eu funds that could be used for critical infrastructure developments. speaking domestically, as the mega - regulator of the financial sector, how do you view the strength of the banking segment in terms of contributing to domestic growth? following the crisis the macedonian banking sector proved to be quite resilient. no banks failed and all were well capitalized.