##closures and we will soon launch a dialogue to find solution in favor of the macedonian economy. hence, there should not be any doubt that in future the national bank will “ hear the voice ” of the banks. but, also, it should be clear that the national bank does not discuss the monetary policy measures with anybody, not even the banks, before it makes a decision to adopt them. they are at the absolute discretion of the national bank. this is a worldwide practice. neither the european central bank, nor the czech central bank, nor any other central bank throughout the world consults or informs the commercial banks on the monetary policy measures before it makes the decision. distinguished ladies and gentlemen, i dedicated most of my last year ’ s speech arguing that the stable denar exchange rate is still the best solution for the macedonian economy. in the public debate concerning this issue last year, on many occasions, i presented additional arguments that underpin my view. on this occasion i will discuss the two theses recently presented by the advocates of floating denar exchange rate. the first thesis is that the floating exchange rate will ensure more relaxed monetary policy, and accordingly, higher economic growth. the second thesis is that the denar exchange rate is not realistic, i. e. it is overrated. yet, so far, i still have not heard any explanation of how would the floating exchange rate relax the monetary policy, nor arguments supporting the view that the denar is overrated. considering the first thesis, note that the exchange rate regime does not determine whether the monetary policy will be restrictive or relaxed. you could have floating rate and restrictive monetary policy, or fixed exchange rate and relaxed monetary policy. what is important for the monetary policy is whether there are imbalances in the economy or not. just because of the absence of imbalances in the macedonian economy, as i elaborated at the beginning, we can afford relaxed monetary policy. conversely, due to the nature of our economy, the floating exchange rate would fuel uncertainty and create imbalances and high inflation, the alleviation of which would require extremely restrictive monetary policy. concerning the overrating of denar exchange rate, i have presented, on several occasions, data on denar real effective exchange rate that indicate quite the opposite. on this occasion i will only refer to the market. it is the market that determines whether a commodity is overrated or not. since the beginning of august last year, the national bank has only once sold

office activities, in the process of reserve management. no transaction can take place without the back office. it provides a vital service to the front office by ensuring that all funds flow in a timely and correct manner and all the necessary documentation is completed. inaccurate or untimely trade capture can have implications for the p & l and risk management process. if the central bank does not capture the correct transaction, then position and reported credit exposure might be incorrect. having in mind the importance of the back office service to the reserve management process, one of the goals of the workshop will be to provide best practices in the area of settlements, then different services provided by the bis central bankers ’ speeches custodians, and the importance of appropriate it tools to perform secured and efficient settlements. all the aspects cover over this week will enable to improve and make more efficient and controlled environment for the conduct of the reserve management transactions. in this regard, although back office activities should be separated from front and middle office activities, it does not mean that operations should be considered as separate from the business. on the contrary, the closer operations management is the pulse of the business, and the better communication channels between all the areas in reserve management function, the more responsive operations to changes in the business. ultimately, the overall reserve management process will be better controlled. to conclude, i wish all of you a fruitful and efficient participation in the workshop, with hopes that you will have incentive to take out the maximum from all the issues to be discussed with the distinguished lecturers from the world bank, as well as between each other during the exercises. have a nice week during this workshop, in skopje. thank you. bis central bankers ’ speeches