deposit facility rate, which is a key money market reference in the current context of excess liquidity, has remained in negative territory, reaching its lowest record at – 0. 40 % in march. the ecb has not been alone in the use of unconventional monetary tools once interest rates reached its effective floor. the federal reserve engaged in successive rounds of quantitative easing through asset purchase programs. all in all, the balance sheet of the federal reserve increased from 870 billion in september 2008 to more than 4. 4 trillion, holding now more than 30 percent of the stock of outstanding mortgage backed securities and nearly 25 % of outstanding treasuries. the bank of england also embarked in quantitative easing through purchases of public sector assets, and holds now almost 25 % of the total outstanding uk public debt. the bank of japan is implementing an intensive quantitative easing program and, similarly to the ecb, they include both public and private issues, but with a very important weight of public debt, which amounts now to more than 80 % of bank of japan ’ s total assets. the size of the bank of japan balance sheet represents now more than 75 % of the japanese gdp. the provision of ample liquidity by central banks has contributed to restore financial market functioning in situations of severe stress and so, to support the economy. in the euro area, the effects of ecb actions are estimated to have contributed to reduce financial stress and fragmentation, easing financing conditions and helping to restore the credit channel. according to available estimates, all these developments have added significantly to inflation and gdp growth over the last two years. and, although quantitative estimates are surrounded by some uncertainty, it is clear by now that this battery of monetary policy actions have reduced the likelihood of very adverse scenarios. in due course, a need to restore more normal monetary conditions will arise, although its precise timing is impossible to predict and will depend on the cyclical situation of each economy or monetary area. this normalization process may create a scenario of monetary policy divergences, in which there maybe unexpected exchange rate movements and communication is very relevant. the combination of macro challenges and regulatory reforms : the current and forthcoming financial landscape for banks i will comment now on the financial landscape for banks and the regulatory reforms. the prevailing low - interest rate environment may pressure banks ’ interest rate margins downwards when the negative impact on the interest rate differential exceeds the positive effect of low interest rates on banks ’ activity. this potential unintended consequence of monetary policy lies in parallel with other factors that

vladusic ljubisa : recent developments in the central bank of bosnia and herzegovina speech by mr vladusic ljubisa, vice governor of the central bank of bosnia and herzegovina, at the 9th meeting of the governors'club in the region of black sea, balkans and central asia, bucharest, 23 may 2003. * * * thank you mr. chairman, your excellency, ladies and gentlemen, i wish to pay my respect to you all on behalf of the cbbh. i will speak about several key development components which have represented current issues in the cbbh since the last meeting. currency board arrangement in the period since its establishment to date, the central bank of bosnia and herzegovina has developed according to the basic principle of monetary policy, this being the currency board arrangement. the currency board in bih has been set up on very clear principles : – stability of the local currency and its issue and withdrawal from circulation ; – fixed exchange rate with full coverage in free convertible foreign exchange funds ; – management of foreign exchange reserves in a safe and profitable way ; – setting up and maintaining payment and settlement systems ; – coordination of activities of banking supervision agencies ; – provision of the required reserve maintenance. by conducting such monetary policy, we have achieved the following results : – confidence in the local currency ; – stable exchange rate ; – growth of foreign exchange reserves which have now stabilized at around euro 1, 1 billion, which is a four - month imports coverage ; – price stability ; – decrease of inflation, which is now slightly above zero ; – improvement of the country ’ s payment foreign exchange position ; – stability of public sector. during the previous months, there has been a discussion in bih whether we should keep such strict currency board rules. the international conference was organized in april on the role of the currency board in monetary policy - history and practice. some of the participants were representatives of east european countries which have their monetary policy based on currency board. the basic opinion expressed during this conference was that currency board was successful in all these countries, but also that currency board in those countries was more flexible. as a result, the opinion expressed at this conference, and also that of the central bank and bih authorities is that bih should keep the currency board set up as presently, with the aim to provide global financial stability, searching additional possibilities to make the currency board serve development and to enable the central bank to participate more actively in the financial sector and to issue short - term securities