in the last seven years, discussing, on about 400 pages, its main activities and accomplishments. these two books are, de facto, a first attempt for aggregate presentation of the historical course of the central banking in macedonia, since the world war ii. i think that this will help the students, the monetary policy analysts, teachers and professors engaged in this issue, and certainly many others in the financial sector. tonight you can see the hard copies in macedonian and in english, and the electronic version of the second book, the seven - year report where we extensively discuss the period that ends these days. nevertheless, i assume that tonight many of you would like to ask to what extent am i ( or are we ) satisfied of what we have achieved, and, what would i, in few words, highlight as the most important? if there is such question, i would briefly say the following : all decisions in the last seven years were made by the national bank, with zero influence from the outside, regardless of the verbal suggestions and insistence coming from well known addresses. the decisions, which usually pass through internal professional filtrations, bis central bankers ’ speeches and are made by the governor and the nbrm council, are within exclusive responsibility of those two bodies, and since the governor is also a president ( with the new law, a chairperson ) of the council, i also consider these decisions, particularly if there were bad ones, as my personal responsibility. i actually want to say that the statutory independence of the nbrm over the last seven years was completely preserved. this should remain in the future. the central bank independence is crucial to the macroeconomic stability and very important to the financial system stability. with such position, i consider that we successfully pursued all assignments entrusted by the law : we preserved low and stable inflation as a primary objective of the central bank. the seven - year average ( 2004 – 2011, april ) equals 2. 2 %. i know what some may think of the so called “ tolerant ” or “ useful ” level of inflation. i leave it to them to “ reconcile ” their “ tolerant ” level of inflation and de facto fixed rate. in case they again oppose to the existing regime of exchange rate, to have even higher inflation, we will be decent enough to seek for an elementary analysis of its usefulness, i. e. of the advantages of such alternative. we maintained a stable exchange rate level, without registering misalignment between its level and the economic

under control and coordination. therefore, the central bank considers that the impact of the non - monetary factors that gave rise to the inflation in 2000 are of temporary character and that in 2001 the inflation will get back to the level from the previous several years. thus, measured according to the costs of living index, the annual rate of inflation in 2001 on december basis ( december 2001 / december 2000 ) is projected to equal 1. 2 %. in that sense, the national bank of the republic of macedonia will continue with its intention to preserve that inflation rate to low, stable and predictable level, which is in compliance with the empirically confirmed knowledge that the price stability creates the most favorable macroeconomic environment for accelerated, long - term sustainable economic growth. the second aspect of the domestic currency stability is preserving the stability of the denar exchange rate. the national bank of the republic of macedonia managed to preserve the nominal exchange rate of the denar against the deutsche mark at the targeted level of denar 31 per 1 deutsche mark. the exchange rate stability was preserved, despite the developments on the foreign exchange market, where the supply significantly exceeded the demand for foreign currency. as a result, the national bank of the republic of macedonia intervened on the foreign exchange market in order to prevent the appreciation of the domestic currency – denar. from the beginning of the year to december 31, 2000, net - amount of usd 190. 1 million was purchased on the foreign exchange market. relating other currencies, the denar fluctuated according to the changes of the exchange rate of the deutsche mark against these currencies on the world markets. monetary policy in 2000, in order to achieve the price stability as its primary objective, the national bank of the republic of macedonia successfully implemented the monetary strategy of targeting the nominal exchange rate of the denar against the deutsche mark. hence, the central bank aimed the money supply at preserving the exchange rate stability as a nominal anchor in the economy. thus, the stock of money supply was sized according to the needs for regular execution of financial transactions in the economy. it should be underlined that in the first half of 2000, the money supply registered considerably high annual growth rates, while in the second half of the year they slowed down, due to the high comparison base from the previous year. thus, in june 2000, the money supply m2 - denar component compared to the same month of the previous year, was by 24. 4 % higher, while in december 2000, compared to