bank support. dear colleagues and dear friends in chisinau, you can be sure of the nbr ’ s full support in the national bank of moldova ’ s endeavour to align to european standards and practices. ladies and gentlemen, distinguished audience, the primary objective of a european central bank is to pursue price stability in the domestic economy. the outcome of the 2008 crisis strengthened the idea that ensuring financial stability is not at odds with achieving the primary objective, but is even beneficial in this respect. fulfilling this objective essentially hinges on central bank independence – political, legal, functional. this is a wide - ranging topic. please allow me, however, to elaborate only on a few ideas about monetary policy independence ; it implies decisions particularly with regard to the key policy rate, the exchange rate policy, international reserve management, setting prudential requirements on minimum required reserves in the banking system. also worth mentioning is the central bank ’ s role as agent when it comes to borrowing via issues of government securities conducted by 1 / 3 bis central bankers'speeches fiscal authorities on the primary market. at the same time, a central bank manages liquidity in the economy by granting credit against eligible collateral, consisting especially in government securities, and may resort to extraordinary interventions for the purpose of ensuring an adequate level of liquidity, for example via quantitative easing programmes, purchasing financial assets – government securities traded on the secondary market – and holding such instruments in its own portfolio. the simple listing of these areas in the monetary policy scope suggests that we are dealing with decisions on highly - technical, sophisticated mechanisms and instruments, based on complex information, working correctly only in an environment of high professionalism. central bank independence, on the basis of a clear mandate, is therefore of the essence. one field where this is all the more obvious, because it has to do with competition on the global market, is the management of forex reserves. in principle, they ensure – especially in the case of emerging economies – the resources to overcome external imbalances and to safeguard a relative stability of the domestic currency ’ s exchange rate around economic fundamentals. the reallocation of reserves for discretionary use and their monetisation strongly erode these essential equilibria, significantly impairing market functionality and the credibility of the central bank and of any government, ultimately to the detriment of society itself. maintaining and managing an adequate level of international reserves, through the competence and professionalism of the central bank, shelter the country from terrible crises

the impact of exit policies in advance economy which will differ in term of speed and magnitude, depending on each country ’ s specific economic character. given this, a faulty exit strategy of the advanced economies could easily spill over into smaller economies, swamping our efforts to deal with the slowdown. managing an exit from the current policy settings as growth recovers poses another test for emeap central banks to that hard - won credibility. with inflation in the process of bottoming out and the recent data flow in emeap countries suggesting a clear recovery in economic activity, we all find ourselves pondering the risk that the economic stimulus provided by fiscal and monetary policy makers might be withdrawn earlier compared to advance economy. in this regard, i believe that monetary policy credibility is particularly crucial to the countries ’ growth risk premium, which is judged by historical inflation volatilities. for some countries, given the inflation volatilities are historically high, a more pre - emptive monetary policy response is warranted in order to anchor inflation expectations. provided that improving balance of payment positions, for countries which historically have strong pass - through from exchange rate changes to inflation expectations such as in indonesia, stronger exchange rates will also be important to keep inflation expectations well - anchored without necessitating to aggressively increase interest rates and hurting the growth recovery. in other words, a strong exchange rate can serve as an effective anchor to inflation expectations. this will be important throughout as higher global commodity prices in 2010 could begin to translate into higher inflation expectations. finally, every country has a stake in the sequencing and magnitude of the strategies of the large economies. the impact of global exit on smaller economies could manifest in a return of recessionary tendencies as well as balance of payments ( bop ) problems, which have generally not been a significant feature so far. imf programs have conventionally been oriented to dealing with bop crises. in the current scenario, the larger resource base may have to be deployed with much more flexibility to help particularly smaller economies to deal with the potentially recessionary impact of exit — a kind of global macroeconomic safety net. some operating guidelines for such a program need to be quickly developed. thank you.