european economies that suffer from the crisis and legacy problems. now it is essential that the eu member states use the breathing space thus provided as a window of opportunity to pursue structural reforms and improve the growth potential and resilience of their economies. this would also help pave the way for the overdue economic transformation towards a more competitive, sustainable and digitalised europe. going forward, we can expect that, with the sizable monetary and fiscal support, the european economy will return to the path of growth over the coming years. this will reduce slack and create inflationary pressures again, and one day the member states and their governments should be prepared to live with less accommodation and higher rates. one should not assume that central banks would accept becoming subject to fiscal dominance, that is, a setting where monetary policy would be determined by the fiscal situation. we are committed to our price stability objective. this is not to suggest that we should opt for an early withdrawal of monetary support. the 1 / 2 bis central bankers'speeches premature rate hikes by the ecb in the midst of the euro crisis in 2011 serve as a reminder of the risks of a premature withdrawal. as monetary policy is as much art as science, it is better to be safe than sorry when considering the right timing to withdraw monetary policy support, and verify for a certain period of time that inflation indeed has solidly reached the medium - term price stability target. in addition to monetary policy support, stronger fiscal stimulus is needed. in this regard the midsummer european council was a disappointment. recent diplomatic actions however give a reason to expect that leaders of the european union can agree on a european recovery fund soon. combined with the individual member states ’ fiscal stimulus, this would reinforce the recovery and better share the burden with monetary policy. however, it is of paramount importance to use the fiscal stimulus for the intended purposes : for health care and employment, and for sustainable development and digital transformation. using the funding on new permanent spending items, would be against its intended goals. that is why conditionality should be reinforced by explicitly bringing in the european semester of economic policy making. under its method of benchmarking and verification, the national reform programmes should be scrutinised by their effect on structural reforms, innovation, and investment. thus, policy measures can be designed so that they genuinely enhance productivity and competitiveness. that goes for every member state, from the south to the north. europe ’ s capacity to create economic prosperity is critical to manage our increasing public

ivan iskrov : reflections on the past year speech by mr ivan iskrov, governor of the bulgarian national bank, to the association of banks in bulgaria on the occasion of the banker ’ s day, sofia, 6 december 2010. * * * ladies and gentlemen, it ’ s a great pleasure to be here this evening with you all, on 6th december, saint nicholas day, and celebrate our professional holiday. over the last eight years i and my colleagues from the bnb governing council, regardless of our numerous engagements, have not missed a single occasion to be with you and celebrate this great day. by this gesture we show our respect for and acknowledgement of the job well done by you in favour of the national economy. commercial banks are not merely some of the many capitalist businesses focused on profit making for their shareholders. the banking system is a major part of the infrastructure of any market economy ; it is its circulatory system. without our daily committed work, our state would not be able to function properly. by tradition today we have the chance to pause and reflect on the past year and to share our hopes that in the year to come we would again successfully meet the new challenges. i have no doubts about that because we all have proved that we are capable of turning trials into useful experience, and experience into a means of completing the mission that society has assigned to us. the economic crisis, continuing into 2010, only confirmed these expectations of mine. banks not only did not become the reason for deepening the problems in our economy, but they were also the main pillar of stability and driver for overcoming the problems. the bulgarian banking system continued to be a paragon of stability and predictability in the face of the unprecedented slowdown in over a decade. as regards the blatantly provocative “ projections ” of some domestic and foreign “ analysts ”, just a few days ago i reminded you of their fantasies in a sort of a chart of “ unfulfilled black predictions ” about the bulgarian banking system. the coming year 2011 is a year of elections. we at the central bank are well aware that it could be possible for some of the local candidates for glory – the eternal candidates to come back on the big political scene – to actively try and “ sell fear ” during the elections year 2011. so watch out! the situation is very complicated, and yet the banking sector stays flexible and efficient ; while the number of non - performing loans is on the increase, the system goes