fact that there has always been, and there will always be, a strong interconnection between the state of the public finances and the quality of the banks ’ balance sheets. because of that, following a deep financial and banking crisis in the mid - 1990s, bulgaria adopted one of the most conservative supervisory standards and practices in europe. what is more, they have been persistently implemented in a countercyclical fashion, both before and during the crisis. as deputy governor simeonov will detail later at this conference, the bnb has mastered and tested successfully a long list of both “ macro ” and “ micro ” bank supervision instruments. in the “ good ” times, the bnb insisted on the build - up of capital and liquidity buffers, discouraging banks from excessive asset growth and risk - taking. but since the end of 2008, the bnb focused on the capital and liquidity relief for banks while also allowing them to ease lending. as a result of these conservative and countercyclical policies of the bnb, and the rather prudent behaviour of the banks themselves, today bulgaria manifests a very stable banking sector, with outstanding capital adequacy and liquidity ratios. four years after the lehman brothers collapse, the banking system of bulgaria remains one of the few in the eu where no single bank needed to be rescued or supported with taxpayers ’ or central bank money. merging the monetary and macropdudential mandates ( including banking supervision ) under the auspices of the central banks is currently being implemented in some of the “ older ” eu member states. the macroprudential oversight of the financial system is being introduced only recently at the eu level. while these new concepts are now being embraced by central bankers and politicians worldwide, the simultaneous pursuit of both monetary and banking stability, from a true macroprudential perspective, has been the order of the day for the bnb for more than a decade now. through our own painful experience with a crisis in 1996 – 1997, we became fully aware of the systemic importance of the financial system. thus a key element behind the success of the overall policy mix in bulgaria is that our central bank is entrusted with the tasks and responsibilities to regulate and supervise the banks in the country, with the goal of ensuring the stability of the banking system. bis central bankers ’ speeches only three days ago, the capital markets provided the latest proof of the efficiency of the macroeconomic policies in bulgaria and the resilience of our economy

money in recent times. in fact, a fundamental, and achieved, objective of inflation targeting was to obtain a more competitive exchange rate. exchange rate targeting, the implicit policy of the 1990s, kept the rand uncompetitive. it is likely that the act of introducing the inflation - targeting framework helped to attract capital in 2000 because it signalled a move to a much better policy framework, but south africa was starved of capital at the for the panel [UNK] s recommendations, see ricardo hausmann [UNK] s final recommendations of the international panel on growth, available at http : / / www. treasury. gov. za / comm _ media / press / 2008 / final % 20recommendations % 20of % 20the % 20i nternational % 20panel. pdf, especially pages 6 and 12 - 13. see, for instance, luke jordan [UNK] s it ’ s time to debate the central bank ’ s mandate, available at https : / / www. dailymaverick. co. za / opinionista / 2017 - 06 - 23 - its - time - to - debate - the - central - banksmandate / #. wvur5rwgoum ( june 2017 ). this point was made at the time by kenneth creamer, in “ sa needs an inclusive growth path ”, mail & guardian, published on 4 july 2008. page 9 of 17 time. any other policy framework that improved on the previous one would have had the same effect. let me make a broader point about this debate. south africa needs capital to develop. it also needs a reasonably competitive real exchange rate. achieving both is not easy, but the simple solutions occasionally proffered are seriously inadequate. first, they invariably focus on nominal depreciation and not on real depreciation ; the inflationary sideeffects of nominal depreciation are ignored. second, the proposals never say anything about the implications for the fiscus, for interest rates, and for the broader economy of targeting a specific exchange rate level. 13 third, i would like to hear why this effort would be successful in south africa when it has not worked well in other democracies that have tried it. even a cursory review of the asian success stories shows they had a very high savings rate and used financial and wage repression and price controls to achieve real undervaluation. how exactly would these authoritarian approaches to policy be implemented here? at the end of the day, we