policy that allowed us to absorb the excess money supply in the economy. the joint action of the various absorption factors has led to a monetary contraction of around ars 27 billion in 2006. both the financial system and the public sector have contributed to the absorption of surplus pesos. due to the scheme set forth by the bcra, the early repayment of rediscounts led to a monetary contraction of around ars 6. 6 billion in 2006, and the number of institutions that are still indebted to the bcra was reduced to two. the minimum requirement policy contributed with ars 4. 4 billion, while the main tool used was the placement of central bank securities, which contributed with ars 10 billion. consequently, in early december the stock of central bank bills and notes amounted to ars 41. 2 billion ( 29 percent of lebacs and 71 percent of nobacs ). throughout the year, the nobacs ’ share at a floating interest rate has increased ( 64 percent of the stock in early december ), vis - a - vis cer - indexed instruments ( 5 percent in that period ) and lebacs in pesos ( 31 percent ). as a result of this strategy, the central bank ’ s debt average term was extended from 260 ( at the beginning of the year ) to 360 days ( in early december ). throughout the year, the central bank introduced changes to the minimum requirement policy, raising minimum cash requirements for demand deposits. in particular, in april we eliminated interest paid on demand deposits and raised the minimum cash requirements from 15 to 17 percent. we also reduced the maximum interest rate paid on funds held at the central bank without full minimum requirements from 75 to 50 percent of the badlar rate for private banks ; and reduced the interest rate paid on the liquidity requirements on money market funds from a nominal year - over - year 2. 55 percent rate to a nominal year - over - year 0. 5 percent rate. in august, additional measures were adopted, raising the minimum requirements for demand deposits in pesos to 19 percent, eliminating the requirements for time deposits of over 180 - day residual maturity, and establishing that only 67 percent of cash held by banks could be used for minimum requirements purposes. these measures aimed at recovering prudential liquidity, acting, in turn, indirectly on the means of payment, promoting the extension of the funding structure, and thus facilitating an increase in credit. our aggressive sterilization policy is feasible due to the central bank

strong demand from india and china, this year in particular there was a very significant increase in speculative positions. in consequence, and in line with the higher price, there was a significant increase in price volatility. against that backdrop, we decided to use a partial hedge strategy, made up of financial derivatives. this has protected us from an eventual decrease in prices and, in turn, considerably reduced the volatility of reserves resulting from fluctuating gold prices. investment in callable bonds involved the need to resort to “ effective duration ” ( instead of the usual duration ) to measure the average term of placements and the portfolio ’ s exposure to interest rate changes. as from this year, a policy of gradual increase in portfolio duration was adopted. this policy is not only the result of expectations on the us rate cycle, but also a gradual process towards the reintegration of benchmarks for reserve management. in fact, as has been empirically proven, the discipline derived from the use of benchmarks, with specific restrictions to deviation, offers tangible results in the medium - long term and is the policy regularly adopted by most central banks. as the element agglutinating all of the innovations mentioned above, a full change in investment policies is being introduced so as to include the basis for investment policies and update the range of instruments available. at the same time, updating investment policies entails, besides the traditional restrictions in terms of liquidity and credit risk, precise limits to market risks, such as value at risk measures, among others. despite context - imposed limitations, the outcome has been very positive. it is estimated that, without taking into account fluctuations in the peso exchange rate, the investment of international reserves in 2006 would yield over usd 1. 2 billion ( 5. 6 percent yield per year over the average stock during that period ). this means that there was a 2 percentage point increase during our term in office. regardless of the very important benefits for the economy in general ( less country risk, less crisis risk ) as a tangible result of a prudential reserve accumulation policy, as our stock grows, its management becomes increasingly relevant. therefore, maximizing investment efficiency and effectiveness through the optimization of the decision - making process impacts on financial performance and is a fundamental basis for monetary policy. 4. the 2007 monetary program 4. 1. the macroeconomic scenario the optimistic scenario for the global and regional economy, together with the pillars of the domestic economic policy, anticipate a