and general macroeconomic instability. the effect of all this was experienced by the citizens 1 / 4 bis - central bankers'speeches and all stakeholders in the economy, which was flagging until 1996. we must never forget it, because when the memory of historical events is lost, the potential for critical observation and making the right decisions in the present moment is lost as well. but we do remember! we also remember the series of bold and decisive steps of the then policymakers towards macroeconomic stabilization, further supported by international financial institutions, especially through the first arrangements with the imf and the world bank back in 1993. the results were gradual inflation drop to single digits, enhanced foreign reserves, control of monetary aggregates, and consolidation of the fiscal sector. crucially, in 1995, the monetary strategy of stable exchange rate of the denar was furnished - a strategy that is an anchor of stability of the macedonian economy today. the same year, soon after the adoption of the bank regulation and supervision, the banking system was rehabilitated, and later on transformed on a market basis. six years later, the payment system reform was introduced, along with the building of other central bank capacities, including in the field of statistics, financial market operations, treasury operations and, of course, research as a significant support for the monetary decision - making. all this created preconditions for the 25 - year long monetary chapter of our story to be engraved with macroeconomic stability and compliance with international and european standards. for many years now, the european commission, in its annual progress reports on monetary policy, has noted a high level of compliance with the european legislation. however, in recent years, besides the constant improvement, we have also confronted and responded to a series of challenges, both domestic and global. just to recall the crisis episodes of 2001, 2008 and 2016, when we as a central bank had to deal with a crisis of confidence, unfortunately prompted by numerous speculations. in all these episodes, we faced pressures on exchange rate and foreign reserves. as an example, during the 2008 / 2009 global financial crisis we lost as much as a third of them. there were also periods of bank runs. for example, during the 2001 crisis, the deposits dropped by as much as 8 % in a very short period of time. unfortunately, even in the recent period we have not been spared from serious challenges. the pandemic brought about economic losses, again required the use of foreign reserves to maintain stability of the

dimitar bogov : economic and financial cycle spillovers – reconsidering domestic and cross border channels and policy responses address by mr dimitar bogov, governor of the national bank of the republic of macedonia, at the 5th annual research conference “ economic and financial cycle spillovers – reconsidering domestic and cross border channels and policy responses ”, skopje, 7 – 8 april 2016. * * * dear governors, your excellences, ladies and gentlemen, dear guests, let me wish you a warm welcome to our fifth annual research conference that we usually host to mark the anniversary of the country ’ s monetary independence. this year ’ s conference is a kind of a small jubilee considering the fact that for five consecutive years we have been inviting policy makers and researchers from the region and wider to discuss main policy issues and research questions, creating useful interaction and mutual knowledge increment, on which we are very proud. in addition, this year ’ s conference coincides with yet another great anniversary – celebration of 70 years of central banking activities in the republic of macedonia and the conference is among the events that mark this immense anniversary throughout the year. as you probably noticed, this year we have chosen quite comprehensive and challenging conference topic : economic and financial cycle spillovers : reconsidering domestic and cross border channels and policy responses. although not a new issue, it has been fully indorsed in the last global crisis and considered to be one of its main lessons that is still widely explored in the central banking and academic community. in dealing with global and domestic economic and financial cycle spillovers in the last years of turbulent global environment, central banks have broadened their objectives by including the financial stability goal, as well as many creative innovations in their toolkit. in a low or zero interest rate environment, the monetary authorities across the world turn to the use of unconventional monetary policy measures and obviously now, several years after the outburst of the crisis, it is still an ongoing practice for most central banks. while still examining their usefulness, it is difficult to discuss their exit dynamics, even in the case of the fed, although its monetary policy normalization started at the end of the last year. anyway, it is still debated whether the unconventional instruments and tools created during the crisis will become an integral part of the conventional monetary policy framework. probably this will depend on country specific circumstances and individual contribution of these newly created instruments and measures in fulfilling policy objectives on price and financial stability. macroprude