less due to labour quality. during the pandemics, the bulk of the adjustment in fact went through the tfp which declined close to 5 %, as the overall context was barely conducive for innovative decisions. 1 / 3 bis - central bankers'speeches in this context, global competitiveness index in terms of innovation capabilities and ict adoption locates us at the 97th and 70th rank ( out of 152 countries ), similar to western balkans peers, but much further from the advanced europe. jointly with several countries in the region, we were positioned in the group of efficiency enhancers, meaning that reforms must be intensified to increase the growth efficiency and quality. increasing the technological readiness was one of the identified priorities. thus, in the last decade, the macedonian productivity level has been staggering to around 40 % of the level of advanced economies, such as german economy. this clearly points that if we want to grow at stronger pace and in a more sustainable, green and inclusive way, we need to continue intensively addressing the structural hurdles for the key long - term determinants of the growth : labour, capital and productivity. let me focus on productivity. at this point, i think i can bring in the highlight of the latest transition report, i. e., innovation and digitalisation of the economies. the adoption of digital technologies can unleash productivity revival and possibly counteract some forces that act as drag on growth, such as adverse demographic and emigration trends that dampen the labour supply. what is the pace of digitalization of the macedonian economy? the new ebrd digitalization index points to a progress in both segments that are captured by the index – first, the preconditions for the use of digital technologies ( digital infrastructure, skills, regulation, provision of government services ), and second, the actual use of digital technologies by individuals and companies. the progress is particularly visible in the area of regulation and provision of government services, where score has more than doubled. still, overall we are scored about 59 % for digital preconditions and 48 % for the actual use of digital technologies, which is close to the regional score, but still far from the frontier of 100. i think that the scores are useful guidelines on where the policies should be focused on. in our case, it is clear that efforts should be concerted in setting a more adequate digital infrastructure, but even more in raising digital skills. on the latter, as noted in the report, significant

to their potential usefulness and to the empirical evidence of their impact and effectiveness. the bis analyses have registered many tools used by the asian countries : ( i ) countercyclical capital buffers linked to credit growth ( china ) ; countercyclical provisioning ( china, india ) ; ( ii ) loan - to - value ( ltv ) ratios ( china, hong kong sar, the republic of korea, singapore ) ; ( iii ) direct controls on lending to specific sectors ( the republic of korea, malaysia, philippines, singapore ) oriented toward managing the aggregate risk throughout the business cycle ( i. e. procyclicality ) ; furthermore, ( iv ) capital surcharges for systemically important banks ( china, india, philippines, singapore ) ; ( v ) liquidity requirements funding ( india, the republic of korea, philippines, singapore ; ( vi ) limits on currency mismatches ( india, malaysia, philippines ) ; ( vii ) loan to deposit requirements ( china, the republic of korea ), as a tool for managing the aggregate risk in every point in time ( systemic oversight ). these examples show that the macroprudential tools could have an effect on the vulnerabilities by increasing the financial sector resilience. the basel committee has already proposed the following tools : - countercyclical capital framework. this will require from the financial institutions to build up capital in good times, that can be drawn upon in periods of stress ; - forward looking provisioning. banks are encouraged to allocate provisions based on expected losses, as opposed to allocating provisions on the basis of incurred loss. this approach is less procyclical than the so - called “ incurred loss ” provisioning model. - capital conservation measures. this measure includes activities aimed at restricting oversized payments of dividends, share buy backs and generous compensation payments by financial institutions. capital requirements are undoubtedly the foundations of the microprudential regulation, but they also have a macroprudent dimension related to the procyclicality of the financial sector. capital buffers which should confront procyclicality should meet two objectives : first, they should help the banking system handle the risks which could materialize in periods of crisis, and second, they should mitigate the reduction of the economic activity in a situation of downward movement of the economy. nevertheless, several key issues remain open for discussion. should the discretionary interventions on the buffers be reduced to the minimum