is a major supplier of energy products to the eu and will in future become an even more predominant source of these products. the eu accounts for the majority of total accumulated foreign investment in russia. in 2003, more than two - thirds of foreign inflows into the country originated from eu countries. loans, the major source of foreign capital flows to the russian federation, are predominantly granted by european banks. in the third quarter of 2003, bis reporting banks from the eu accounted for almost 90 % of the russian federation ’ s outstanding bank debt. finally, there are signs that the euro is being used increasingly as an international currency. i firmly believe that we have just begun to discover and explore the mutual benefits of economic integration in terms of trade and investment flows. enlargement will lead to an acceleration of this process. the eu is committed to sharing the advantages of enlargement with its neighbours, as outlined in the commission ’ s communication on the recently published “ european neighbourhood policy ”. this applies first and foremost to the russian federation. the concept of a common european economic space is a clear indication of this. in this respect we welcome the bilateral agreement that has been reached with the eu on the accession of the russian federation to the wto. russia ’ s wto membership should certainly bring about benefits for world trade, but most of all it would benefit trade between two large economic neighbours : the russian federation and the eu. the bank of russia and the eurosystem against the background of these global and regional developments, the eurosystem and the bank of russia have significantly extended cooperation on central banking issues over the past few years. the most visible form of this is the eurosystem ’ s involvement in the eu tacis project with the bank of russia on banking supervision. its wider objective is to enhance the stability of the russian banking system through capacity - building at the bank of russia. since last november the ecb, nine national central banks of the euro area and three non - central bank supervisory authorities of eu member states have been jointly implementing an intensive and multifaceted project. i would like to take this opportunity to thank everybody involved for their efforts and open and constructive approach to meeting the challenges such a complex programme entails. with this seminar we want to strengthen and broaden our dialogue on all central banking issues, taking account of developments not only on a global and bilateral level, but also in our own economies. in this context, the russian federation ’ s rebound is - as a

recent imf publication put it remarkable. indeed, it is worth bearing in mind that when europe was preparing for the third stage of emu, russia was hit by a severe financial crisis. since then, the russian federation has not only witnessed several years of strong growth but also the gradual emergence of an environment conducive to monetary and financial stability. inflation has fallen to almost single digit levels, the external value of the rouble has stabilised, market interest rates have declined significantly and the government budget has just recorded its fourth annual surplus in a row. furthermore, these positive developments have been supported by a high level of oil and gas revenues. but its rebound has not only been based on oil and gas. a package of structural reforms has been implemented in recent years, covering such areas as taxation and budgetary systems, the judiciary and land reform. finally, and most importantly from a central banking perspective, stability - oriented macroeconomic policies have been pursued. however, many challenges remain. they can be found on each policy level i have touched upon : global, regional and domestic. we will focus on three of them, namely the conduct of monetary policy under integrated capital markets, the current state and outlook for the economic integration of the eu and the russian federation and the development of our domestic banking sectors. since frank and open discussions are the basis for a better understanding of issues and policies, i would like to conclude by encouraging all of us to participate actively in this seminar. i very much look forward to an exciting exchange of views. thank you very much. bolshoie spassiba za vnimanie.