in the last seven years, discussing, on about 400 pages, its main activities and accomplishments. these two books are, de facto, a first attempt for aggregate presentation of the historical course of the central banking in macedonia, since the world war ii. i think that this will help the students, the monetary policy analysts, teachers and professors engaged in this issue, and certainly many others in the financial sector. tonight you can see the hard copies in macedonian and in english, and the electronic version of the second book, the seven - year report where we extensively discuss the period that ends these days. nevertheless, i assume that tonight many of you would like to ask to what extent am i ( or are we ) satisfied of what we have achieved, and, what would i, in few words, highlight as the most important? if there is such question, i would briefly say the following : all decisions in the last seven years were made by the national bank, with zero influence from the outside, regardless of the verbal suggestions and insistence coming from well known addresses. the decisions, which usually pass through internal professional filtrations, bis central bankers ’ speeches and are made by the governor and the nbrm council, are within exclusive responsibility of those two bodies, and since the governor is also a president ( with the new law, a chairperson ) of the council, i also consider these decisions, particularly if there were bad ones, as my personal responsibility. i actually want to say that the statutory independence of the nbrm over the last seven years was completely preserved. this should remain in the future. the central bank independence is crucial to the macroeconomic stability and very important to the financial system stability. with such position, i consider that we successfully pursued all assignments entrusted by the law : we preserved low and stable inflation as a primary objective of the central bank. the seven - year average ( 2004 – 2011, april ) equals 2. 2 %. i know what some may think of the so called “ tolerant ” or “ useful ” level of inflation. i leave it to them to “ reconcile ” their “ tolerant ” level of inflation and de facto fixed rate. in case they again oppose to the existing regime of exchange rate, to have even higher inflation, we will be decent enough to seek for an elementary analysis of its usefulness, i. e. of the advantages of such alternative. we maintained a stable exchange rate level, without registering misalignment between its level and the economic

fundaments. in 2004, the foreign reserves stood at euro 717 million, and in 2011 ( april ) they climbed to euro 1 872 million, which is by 2. 6 times more, and always ample to respond to the occasional imbalances in the foreign exchange market. the crucial question would be : was the banking system making enough credits i. e. was the national bank disabling the “ smooth ” lending to the private sector, or was it the opposite? the figures speak for themselves! in the seven - year period from 1997 to 2003, the average annual credit growth equaled 11. 6 % and in the seven - year period from 2004 to 2010, it equaled 23. 1 %, which is by two times faster. the comparison between the credit growth and the gdp growth shows that in the 2004 – 2010 period, the nominal credit growth was by 3. 12 times faster relative to the nominal gdp growth, while the credit real growth was by 5. 7 times higher relative to the real gdp growth. should this difference be even greater? the banking system also improved substantially. it remained undamaged even during the great recession. i. the solvency remained high. the capital adequacy ratio was preserved to a very good level of 16. 4 %. the liquidity, after the worrying downward trend ( 2007, 2008 and early 2009 ), was reestablished, thanks to the undertaken measures, to a very solid level. in march 2009, the liquid assets constituted 20. 2 % of the total assets, and in december 2010 it made up 30. 7 %. the household deposit - liquid asset coverage ratio increased from 44. 6 % to 61. 9 %. the quality of credit portfolio improved substantially. ii. in the seven - year period from 1997 to 2003, the average share of nonperforming credits in the total credits equaled 19. 2 %, and in the period from 2004 to 2010 it reduced to 10. 8 %. at the end of 2010, it equaled 9 %, which is an improvement of more than twice. iii. the average share of credits in the three riskiest categories ( c, d and e ) in the banks ’ own funds reduced from 54 % ( 1997 – 2003 ) to 22 % ( 2004 – 2010 ), which is an improvement of 2. 4 times. these achievements result from the improved bank governance and the advanced nbrm supervision based on the improving regulation. iv.