- has always been very fiscally responsible because they know that they can finance a big part of the debt of the government by issuing pesodenominated bonds. indeed, around 80 percent of our debt is domestic debt, and much of that is longer than two years. in summary, what you have is the financial and banking conditions of the philippines that are consistent with long - term growth. no shortcuts. no boom and bust. we try to keep growth as steady as possible and to make sure that the banks are strong so that the economy will be supported by price stability, financial stability, and the payment system that we support. thank you very much. 4 / 4 bis - central bankers'speeches

announced an end to quantitative easing and markets started to price in first increases of boj interest rate. this may expose some emerging markets, which have weak fundamentals to a change in investors ’ sentiment, may lead to the depreciation of local em currencies and a significant drop in market liquidity. 11 some risks are also related to the changing structure of our financial markets. since the second half of 2004, the liquidity of offshore spot zloty market has increased significantly and average daily turnover reached almost usd 1 billion. in addition, high nominal values of single transactions between non - residents contribute to a segmentation of the zloty foreign exchange market. this phenomenon is even more visible in the case of the zloty option market. at the same time the consolidation of the polish banking sector, transfer of treasury operations to parent banks and very limited amount of polish banks ’ capital, which determines the scope of risk they can take, limits the liquidity of the domestic market. in the future, financial market for instruments denominated in zlotys could become even more segmented and therefore less effective in absorbing different kinds of risks. 12 this process will accelerate with our accession to the eurozone. experience of some emu members, e. g. finland, indicates that emu membership will be accompanied by a visible contraction of the domestic market. 13 the introduction of the euro will change banks ’ internal organisation of risk and liquidity management. treasury activities will be centralised on a multi - country group level and proprietary trading will be transferred abroad to head offices. this process might be accelerated by the already observed transformation of subsidiaries into branches of foreign banks. domestic outlook let me turn to domestic outlook of the polish economy. the nbp projection released in april - which assumes unchanged interest rates at 4 percent - points to economic growth within the range of 4. 5 to 5. 5 percent in the years 2006 - 2008 and inflation gradually returning to 2. 5 percent target sometime in 2008. the statement issued after the april monetary policy meeting stated, and i quote 14 : “ the council maintains its assessment that with large probability inflation will in 2006 q2 and maybe q3 remain below the inflation target mainly due to short - term factors. if the developments in the economy were consistent with the april nbp inflation projection, then the current level of the reference rate of the central bank would support a gradual return of inflation to the target over the projection horizon and would also be condu