the financial and macroeconomic stability in the country. the bnb was to determine the moment, after which the convergence grows into a self - propelled process of struggling for a market share. such a transition entails considerable risks, as it does not lead to sustainable growth rates of both financial intermediation and economic activity and employment. therefore, since the beginning of 2004, the bnb started a process of phasing in measures ( primarily prudential and administrative ) aimed at slowing down bank credit growth to a sustainable level, which would not put to risk the stability of the economy. data indicate the central bank ’ s policy resulted in a change in commercial banks ’ behaviour and reduced the growth of bank lending to 32. 4 % at the end of 2005. in the current year, while sustaining the effect of already implemented measures, we expect banking credit to grow with a rate below or near 20 %. as i mentioned earlier, the dynamics of banking intermediation in the country cannot be contemplated in isolation from the process of free movement of capital and the accompanying dynamics of the balance of payments current account. intuitively, many economists tend to seek direct cause and effect relation between bank credit growth and the current account dynamics. they rely on the logic that the growth of banking intermediation increases the possibilities for consumption and investment, which combined with the existence of free trade and the slower response of domestic supply leads to the accumulation of external imbalances. such reasoning is to a great extent rational, but it should not lead, as is clearly manifested in the bnb ’ s policy, to defining the simple rule that the balance of payments dynamics can be directly controlled through controlling the banking credit rates of growth. this clarification allows me to turn to the next issue i would like to discuss, namely the dynamics of the country ’ s external position. the stable macroeconomic environment in bulgaria, plus the sustainably high rates of economic growth and the prospects for its membership in the eu brought in an increasing amount of investments. their share in the gdp in the first three quarters of 2005 increased to 26. 6 %, which marks the highest level reached since the beginning of economic reforms in the country. the growth of investments and the concomitant improvement of employment, increase both the current incomes of households, and their expected future incomes, which is associated with increased consumption and decrease in the savings in the economy. as a consequence of these processes, the gap of the balance of payments current account widened

resident corporations and financial institutions deciding that the rmb served them well as a unit of account, means of payment and store of value for their international transactions. i ’ m not sure any of us are in a position to predict if and when this will happen. however, i feel that we can say with some confidence that the landscape of the offshore rmb market will change in two respects. first, we are likely to see the increasing maturity of the offshore rmb market, both in terms of the depth and breadth of the market and the efficiency of price - setting and allocation of rmb funds. in more granular terms, this means we will see an expansion and greater diversity of rmb financial activities : up till now, the intermediation of rmb funds has been primarily about placement of bank deposits by personal and corporate customers. in future, it will move more towards issuance and investment of bonds and a wider range of other financial instrument and products. at the same time, i would expect that in future there will be more active borrowing and lending of rmb funds among banks. if so, this would lead to the emergence of a rmb interbank funding market. in addition, i would expect to see increased rmb trading in the forex market, which in turn should lead to the development of more sophisticated instruments. the second change to offshore rmb markets we can confidently expect is the further development and strengthening of links with the onshore rmb market. as a critical piece of infrastructure that supports the internationalisation of rmb, the offshore rmb market cannot operate in isolation. given continued liberalisation of cross - border rmb transactions by the mainland authorities, we will see more and wider channels for the flow of rmb between the onshore and offshore rmb markets. this will be critical for the sustainable development of the offshore rmb market and, thus, the future role of hong kong. role of hong kong and this brings me now to my third point, the development of hong kong as the offshore rmb business centre. let me start by saying that hong kong ’ s role is not an accident or a result of chance. it stems from our city ’ s historical and indispensable role facilitating the opening up of the mainland economy. since china ’ s liberalisation and reform began three decades ago, hong kong has served as the global gateway for trade and investment with the mainland. even to this day, hong kong still intermediates some 30 % of the