bank ad skopje. dear guests, the fact that the leaders of this fund offered to present their financial services in the republic of macedonia, the central bank certainly encouraged and supported this initiative, shows that these important partners consider the republic of macedonia a friendly environment for launching various mutually beneficial business initiatives and projects. yet, we do not forget though, that some of these institutions had no doubts whatsoever about the republic of macedonia even in the most difficult periods for us after gaining the independence, since when nobody else was coming, they were here. we certainly appreciate that. regardless of all above, we still have many reasons that urge us to notice and convince others why is it good to invest in the republic of macedonia and to develop partnership with our economic agents and, of course, to inform on the activities that all of us in our country perform, directed towards increasing the attractiveness of the republic of macedonia as investment destination. hence, we definitely need such financial offers. the economic growth could be accelerated by more investments, competitive offer of financial instruments and products, which are likely to eventually bring about lower costs for borrowing capital. the potential investors should be aware that the macedonian financial sector is booming, but that the room for investments is yet to be opened. the gross national savings is low, not more than 12 - 17 % of gdp, over the recent several years. the gross domestic savings have been even lower over the last five years, swinging around 2. 5 % of gdp, on average. since 1995, the gross investments have virtually never exceeded 20 % of gdp. the foreign investments, except in the years of large privatizations by foreign companies, are also low, barely 2 % of gdp, on average, in the last 4 years. the total bank assets, even though registering a fast growth over the last years, making up roughly 50 % of gdp, still shows low level of financial intermediation in the country. the above figures were target of a deep impact of the external shocks the country suffered, besides, of course, the inexcusable delay of many essential reforms of the vital sectors of the country. but, eventually, the potential investors and creditors have to believe that : - the political and security shocks in the region and inside the country are behind us, - the economy accelerates its growth, which over the recent years is not below 4 % real gdp growth, - we preserve high macro - economic stability that implies exceptionally disciplined monetary and fiscal policies, which in turn result in low

##ning, instead of improving the balance of goods and services. to the same end are the different, but more emphasized arguments based on empirical studies : the competitiveness of the macedonian economy is not reduced and the research of the effective exchange rates continuously shows their adequacy. this policy of stable exchange rate has caused the inflation in the republic of macedonia in the last fifteen years to average 2. 1 percent, versus 1. 9 percent in the countries of the eurozone. with a difference of only 0. 2 percentage points, the republic of macedonia is among the most successful countries in transition. in this context, it is worth emphasizing one more comparison from the past fifteen years. the republic of macedonia has avoided the continuous appreciations of several years that during the crisis were followed by depreciations, a cycle to which the countries of the region of central and eastern europe with fluctuating exchange rates had been exposed to. thus we avoided the illusion of increased productivity – an illusion that these countries had to pay for in the crisis years. given this background of successful monetary independence and the denar as a means for building confidence, i believe it is fair to point out that in the past fifteen years, the attracting of savings in denars and the impartial and rigorous channeling of those savings to the most efficient and most effective economic projects by the commercial banks have also been achieved to the extent possible. this " to the extent possible " is partly a result of the trauma caused by the numerous devaluations of the domestic currency in the not so distant past, when savings became almost worthless. but this past means that in the previous fifteen extremely successful years for the monetary policy, there is an expected, though irrational stigma on the denar, which however becomes rational because it is rewarded. in other words, depositors believe that they need very high nominal interest rates in denars, in order to have a real return on savings, which leads to high interest rates on loans. this phenomenon was not and is not a result of the mistrust in the banking system. mistrust of depositors comes from the fear that due to possible devaluation followed by inflationary transmission effects, saving in denars would be insufficiently compensated if interest rates on savings deposits in denars come too close to the interest rates on deposits in euros. the stability of the exchange rate which established the idea that price stability is a public good one cannot live without, is the reason why depositors