dimitar bogov : challenges of bolstering growth rates and ensuring their sustainability opening statement by mr dimitar bogov, governor of the national bank of the republic of macedonia, to the bank for international settlements working party on monetary policy in central and eastern europe, skopje, 11 – 12 february 2016. * * * dear colleagues, dear guests, it is my honour to welcome you for the annual meeting of the bis working party on monetary policy in central and eastern europe, hosted by the national bank of the republic of macedonia. i look forward to discussions on the key issues the policymakers are currently facing. many of the economies in our region have strong trade and financial linkages with the rest of the world. therefore, a natural starting point would be to assess how conducive the global environment is for our key goal of bolstering growth rates and ensuring their sustainability. unfortunately, almost a decade after the acute stage of the crisis, it seems that the global environment is still fragile. although the world economy is recovering, growth rates do not seem to be strong enough, and what is even more problematic, this “ low growth mode ” might be here to stay. the frequent downward revisions of global growth prospects indicate that uncertainty is weighing on growth. global growth rates are staggering slightly above 3 %, on average, and the medium - term prospects do not seem to differ much. growth is also uneven, with the short - term prospects more favourable for the group of the advanced economies, and paler for the emerging and developing world. the risks in the latter group, which accounts for almost 60 % of the global gdp and has contributed with more than 80 % of the global growth since 2008, seem to be large and strong enough to constrain the growth of the world as a whole. it is not only the relatively slow global recovery that is worrisome. the fact that downside risks to the baseline growth scenario are prevalent, accentuates the uncertainty and fragility of the growth outlook. what are the main risks that should be pinpointed? first, there is the economic transformation and rebalancing in china, which is moving away from the previous model of export - and investment - led growth based on manufacturing towards a larger reliance on private consumption and services. second, we are observing a large fall in oil and commodity prices, often reflecting concerns over the subdued global demand. third, there is the gradual normalisation of fed policy rates as opposed to the

itself. financial markets, however, come in different colors and rich hues. to make an integrated market come alive, we need the breadth and depth of capital markets. the ability to raise capital is necessarily premised on having thriving fixed income and equity markets so that surplus funds can be invested on those willing to take an entrepreneurial risk. doing so requires a payments and settlements system that is holistic and efficient, from large - value to retail payment systems and securities settlements. this must be supported by the necessary financial market infrastructures – ccps, csds, trs – run under uncompromising standards of good governance and risk management. all of these must be in place in each jurisdiction and then linked and aligned with the rest of the asean jurisdictions6. as i understand, there is still much work to be done in this area, particularly in light of the global market reform agenda. we need a functioning insurance market so that stakeholders can either hedge their risk exposures or transfer the risks to those who are better positioned to manage them. the notion of an “ insurable event ” for both property and finance has shifted through time and the same dynamism is necessary if we are to adapt to a fast evolving market landscape. and certainly, we need indigenous asean banks to bridge markets, offer products and services and meet the varied needs of consumers and producers. asean ’ s saving – at 31 % of gdp and 11 percentage points higher on average than the rest of the world – needs a repository before these can be intermediated or invested. with collective gdp at usd2. 57 trillion7 in 2014, the amount of economic saving is not trivial. asean banks must have the depth of risk capital and the breadth of expertise if they are to handle cross - border banking. this is for a region that has consistently grown but is also defined by the diversity of its member states. ibid. “ southeast asia at the crossroads : three paths to prosperity ”. mckinsey & company. november 2014. “ asean community 2015 : managing integration for better jobs and shared prosperity ”. adb & ilo. 2014. the current linkage is the asean trading link – on equity exchanges of thailand, malaysia and singapore. data from asean website. bis central bankers ’ speeches market “ surprises ” : what we learned for all asean ’ s current strength and potential, recent global developments have had an impact. one would surmise that asean trade exposures to greece would not be that significant. yet, when