an outsourcing hub. while a comprehensive system for collection of aggregate statistics for compilation of the balance of payment is in place, perhaps we need to develop a system to capture transaction level data similar to that for merchandise trade to improve our understanding and guide policy action, wherever necessary. 11. let me now turn to the capital account transactions. the statute provides that the reserve bank ( and when the 2015 amendment to fema, 1999 is notified, the central government in some classes of transactions ) will regulate which capital account transactions are permitted and to what extent and subject to what conditions. partly because of this construct of the statutory provisions but mostly because of the evolving macroeconomic conditions during the past two decades, majority of the policy actions have related to the capital account. 12. as i mentioned earlier, starting the 1970 ’ s, and through the 1980 ’ s and well into the 1990 ’ s there was a strong advocacy of full capital account convertibility by the free market proponents. this culminated in the 1994 madrid declaration of the imf to encourage the member countries to remove impediments to capital flows. however, subsequent global economic developments have modified the stance and it is now admitted that capital controls can indeed be used an instrument for macroeconomic and financial stability. the goalpost has now shifted from convertibility, an event to capital account liberalisation, a process. this raises issues about the pace and composition of the liberalisation the drivers of which are eclectic and country specific rather than based on universal principles. broadly, three determining factors are important : ( a ) the preconditions for opening up of capital account ( b ) the cost and effectiveness of capital account restrictions and ( c ) monetary policy implications of an increasingly open capital account. of course, the stability and orderly conditions in the forex market remains the proximate determinant of the policies relating to capital flows. in our case, while capital inflows serve the twin purposes of bridging the export - import gap and the savings - investment gap, the above considerations will determine the approach to regulation. 13. there are usually three preconditions for capital account liberalisation discussed : price stability, fiscal stability and stability of the financial institutions and markets. as we speak to day, achievements in respect of the stated parameters vary. the fiscal deficit at the general government level needs consolidation. it is desirable that growth along with low inflation and fiscal prudence become well entrenched before we take quantum steps towards a more open

attention from such policy efforts. conclusion remaining challenges, however, should not distract from past achievements. so let me conclude by congratulating you once more on the impressive track record that the cbbh has built up over the past 20 years. the ecb will continue to offer technical cooperation and advice whenever possible, and we will accompany you and other central banks in the western balkans on your journey towards the eu. we look forward to our future work with colleagues from the region, including you, governor softic, and the central bank of bosnia and herzegovina. i wish you and your colleagues all the best for the next 20 years and beyond. thank you for your attention. 1 for more information, see b. cœure ( 2017 ), “ convergence matters for monetary policy ”, speech at the competitiveness research network ( compnet ) conference, brussels, 30 june. 2 see also draghi, m. ( 2017 ), “ the interdependence of research and policymaking ”, speech at the lindau nobel laureate meeting, lindau, germany, 23 august. 3 mid - 2017 data. for further details, see the special feature on “ unofficial euroisation in cesee countries ” in the international role of the euro, ecb, 2017, pp. 45 – 49. 4 windischbauer, u. ( 2016 ), “ strengthening the role of local currencies in eu candidate and potential candidate countries ”, occasional paper series, no 170, ecb, april. 4 / 4 bis central bankers'speeches