system! i have no problems saying that, despite the fact that in the rest of the economy privatisation itself is proclaimed as the ultimate goal! but i never compare the financial sector to the rest of serbia, as it should not be our benchmark! 3. finish the restructuring of the national bank of serbia national bank of serbia has reduced the number of employees by almost 75 % since october 5th, 2000 and has been halved since i took the position of the governor. despite the fact that the average salary increased by almost 30 % last year, the total amount ( taking into account all employee salaries ) remained the same. and i am convinced we can still do more! and now let me move on to some of the issues i was asked to highlight! were our monetary policy measures effective during the last two years? yes, they were because without them the inflation rate would have been substantially higher and loan growth even more explosive! has the central bank administrative tools to stop completely the monetary expansion and credit growth? of course it has. but do we want it? the answer is decisively no! i have no problems admitting that i would have preferred to see a lower level of euroization as of today, but it will come and we are already on a good track. as far as accumulation of new foreign commercial debt is concerned it is going to be a challenge in the medium term! but these challenges, i honestly hope, are shared by the financial community as well, because it is their money! there are lots of talks, including speculations, regarding the coordination of monetary and fiscal policies. let me emphasize some issues here : • i talk to the minister of finance just often enough and the coordination is fine ; • i do not judge the work of the government based on public statements because it is simply impossible, but based on concrete numbers ; • i do not agree with several steps the government is taking in the area of enterprise restructuring and fiscal policy, but i do not hide it and, whether i like it or not, the government is independent and responsible not to the national bank of serbia but to the parliament ; • journalists are masters in provoking quarrels between government ( minister of finance ) and governor, but i do not see that myself or the institution could benefit from it, as the national bank is not running for seats in the parliament ; • and yes, there is too much burden on monetary policy and the central bank and i would love to get a helping hand ; •

irresponsible behaviour of some financial players has inflicted on our societies and on the real economy. in my introductory remarks today, i would like to explore some of the lessons for policy - makers around the world that can be drawn from the extraordinary events of the past three years. i will first elaborate on why we need a set of rules, institutions, informal groupings and cooperation mechanisms that we call “ global governance ”. second, i will analyse how, in hindsight, the existing system of global governance has fared during the crisis. third, i will examine the evolution of the system in response to the crisis, in particular the rise of new key players in the world economy, such as the g20, the global economy meeting of central bank governors and the financial stability board. 1. why we need global governance there are numerous definitions of global governance. in the economic and financial sphere i will propose that global governance comprehends not only the constellation of supranational institutions – including the international financial institutions – but also the informal groupings that have progressively emerged at the global level. those informal forums ( g7, g10, g20, etc. ) are key in improving global coordination in all the areas where decision making processes remain national – whether in helping to work out agreed prudential standards and codes or to facilitate where appropriate, the coordination of economic macro - policies. no market can survive without a set of rules. this is particularly true at the international level, where natural barriers to transactions are formidable. one of the global governance ’ s primary aims should be that of facilitating the proper functioning of cross - border markets and thereby of reducing transaction costs. the process of doing so is evolutionary and demands a pragmatic approach with respect to what arrangements may and may not work, depending on the circumstances. but the more complex the goods and services exchanged are, the greater the need for a sound institutional infrastructure. in this respect, finance stands out as an arena in which global rules may be particularly beneficial. more generally, the crisis has weakened the arguments of those who think that deregulation is always conducive to better functioning markets. we have learned once again that markets cannot function properly without an effective regulatory and supervisory infrastructure. governments, central banks, international institutions and globally agreed prudential standards and codes are the means by which we collectively seek to avail ourselves of the global public good of global economic stability. of course, there are limits to what internationally agreed