last but not least, i am also aware that if inflation comes down it will happen only “ thanks to the tough fiscal stance of the government ” but if it remains high it will be “ due to the not restrictive enough monetary policy ”. but i do not care about the comments, only results! however, i do get more than annoyed when instead of appreciation i hear accusations from some government representatives that did not do their fair part and, in addition to that, even criticize the central bank for being hyperactive! recently i have been hearing a lot of tenuous criticism of the national bank of serbia regarding bank privatisation. let me set it clear : i / we did not cause the interruption of the saa talks with the eu, i did not contribute to the substantial increase of both usd and eur yields on serbia ’ s debt, nor did i say that serbia does not need a new imf arrangement. these are the crucial reasons that may prompt a bank to come or not to come to serbia, and not reserve requirements on short - term foreign borrowing up to two years! i definitely communicate differently with the industry compared to my predecessors. i do not like oneon - one meetings and do not give oral promises ; neither do i suggest to general managers what they need to do! i have no problems admitting that some events between the commercial banks and the national bank of serbia could and should have been avoided. but this is transition and do not underestimate the role of the journalists that love to create headlines! last but not least, the exchange rate. “ more float and less management ” has been emphasized and carried out by the national bank since september last year. the events of the last days of 2005 and the recent week are just a proof of the need to hedge foreign currency positions – the sooner the better. the exchange rate is not even mentioned among the 3 goals the national bank of serbia should pursue! it will take some time to enter the eu, and thereafter the eurozone, so we do not have an alternative. the central bank will not allow excessive daily fluctuations either way, but the rate is being increasingly determined by the market! so do not fall into the “ good old serbian ” habit : all gains from depreciation are, so to say, normal extra profit and are automatically pocketed, while in the case of appreciation the blame is on the central bank! if you are gambling, you cannot accuse the casino of losing your money! i would like

envisaged in our projection. as regards developments in the international environment, uncertainty remains regarding risk premium movements, which may affect capital flows and exchange rate trends. movements in risk premium will also be largely affected by future compliance with the budgetary framework. in this regard, conclusion of a precautionary arrangement with the international monetary fund is a step in the right direction as it contributes to macroeconomic stability. if fiscal policy adheres to the planned framework, there will be scope for monetary policy to respond more strongly to the disinflationary impact of slackening economic activity. * * * over the last six months, responding to diminishing inflationary pressures, the national bank of serbia lowered the key policy rate, by a total of 2. 5 percentage points to its current level of 10. 0 %. based on the inflation projection presented today and its underlying risks, the executive board of the national bank of serbia judges that the key policy rate is more likely to be lowered further in the coming period than raised or kept on hold. the executive board confirms its previously expressed confidence that year - on - year inflation will continue to fall and that its return within the target tolerance band is likely in the first quarter of the next year. bis central bankers ’ speeches