maja kadievska - vojnovik : current trends and future of the financial system in the region address by ms maja kadievska - vojnovik, vice - governor of the national bank of the republic of macedonia, at the regional summit of governors, bankers and businessmen “ financial systems in the region ”, belgrade, 8 november 2013. * * * dear mrs. jorgovanka tabakovic dear governors dear guests, first of all, i on behalf of the governor of the nbrm, mr. bogov, i would like to apologize for his non attendance today, on this very important event. he was unable to joint this event due to objective reasons, but, let me express my truthfully pleasure that i have opportunity to express my views and the views of the governor regarding to the latest development and future challenges for our country and our banking system. after the double - dip recession, in the first half of 2013 see are on the way of recovery. the gdp growth in the rm in the first half of the year is 3. 4 % and is highly influenced by the positive contribution of reforms ’ agenda. the improved business environment ( rm is at the list of 10 best reformers according to the doing business for 2013 ), the entrance of fdi's that have lead to export diversification alongside with the positive developments at the labor market, are key growth drivers. the increased public investments in the infrastructure, provided by still comfortable fiscal position ( the budget deficit was on average 3 % of gdp during the crisis and the government debt is at 34 % of gdp, the forth lowest in the europe ) are additional factor for growth. however, although the negative spillover effects of the global and euro zone crisis to the trade, remittances and fdi ’ s could be diminished as euro zone recover, still, the financial system of our see countries, that is broadly based on banks, is exposed to the risk of disruptive withdrawal of funds by european banks. thus, when we assess the crisis ’ s impact on the financial system in our economies, we should distinguish the two phases. in the first phase of the global crisis, the negative spillover effects were pronounced on the local capital markets, with large portfolio withdrawals by institutional investors. on the other side, in that time, the vienna initiative has prevented a systemic banking crisis. however, with the new wave of the eurozone crisis ( extended at the end of 2011

speeches being more explicit about appropriate policy can clear up a lot of uncertainty. for example, suppose inflation were running higher than we would like, and the economic projections in the sep showed it coming down over the next couple of years. in the absence of information on participants ’ policy projections, the public would not know whether the fomc thought inflation would simply come down on its own or whether it thought that a monetary tightening would be required to reduce inflationary pressures. including policy projections will help clarify such judgments. in my opinion, this is a substantial, first - order improvement in policy communications, and this greater clarity may have significant additional value for improving how the economy operates. expectations of the future path for policy and the degree of uncertainty surrounding those expectations are key determinants of private borrowing rates and other asset prices. these play an important role in the spending and saving decisions of households and businesses. households and businesses will be able to make better - informed decisions if they have a clearer notion of future policy rates ; the potential for reduced uncertainty could also lower the risk premium embedded in longer - term interest rates. the second new communications initiative – a more explicit consensus framework for monetary policy – is still a work - in - progress. thus i can only talk about it in generalities and give you my personal views about what it should say and why it would be very helpful. in my view, a framework statement should help clarify what the dual mandate goals of maximum employment and price stability mean in terms of measurable economic outcomes. it should also convey the extent to which monetary policy can be expected to deliver particular long - run outcomes. and it should better enable the public to form expectations about how policy will react to economic disturbances that move employment and inflation away from levels consistent with the dual mandate. as i noted earlier, our goals of maximum employment and price stability usually are not in conflict ; but when they are, a more explicit framework can provide a better idea of how the committee will weigh the relevant costs and benefits that enter this more difficult decision - making process. i have strongly supported the publication of our policy projections, and i strongly support the adoption of a more explicit consensus framework statement. in my opinion, my current policy views and prescriptions continue to be appropriate in light of these new communications vehicles. the threshold policy i discussed earlier advocates keeping the federal funds rate near zero until either the unemployment rate falls below 7 percent ( at least ) or until medium - term inflation breaches 3 percent. the f