of the oecd in paris from september this year. he visited belgrade on route to macedonia where he has been working for several years on the pension system reform, that is, on setting up the second and the third pension pillars. currently, 35 % of all contributions for pension insurance are paid into the second pension pillar and such payment is made compulsory for all first time employed in macedonia since 1 january 2003. hence the decrease in the volume of current payments into the state pension fund and the increase in the volume of contributions from the budget to the state pension fund. however, this new pension scheme will cut future budgetary expenditures. saying “ let us first develop capital market and then consider the pension system reform ” reminds me of people saying “ i will work harder once you pay me better ”. to conclude, the pension system reform would provide a substantial contribution to the development of the capital market. the reverse scenario would simply take too long, the luxury of which serbia can no longer afford! in a fable “ the butcher and the dog ” dositej obradovic makes a reference to an old serbian saying : “ do me a favour – cheat me early in the game ”. i think that the latest incidence of “ cooling off ” of the belex 15 and belex line indices has had a positive effect. if nothing else, it has been a sobering experience to many market players – i received letters from some of them – which made them rethink the meaning of the market, the amounts to be invested on the stock exchange, sources of funds, maturity of investment, etc. regardless of the fact that the nbs is in charge of supervision of the banking sector, it is well known that we are very much in favour of the development of the capital market as such development can, not only contribute to the strengthening of the overall financial sector but also to making the banking sector more profitable, i. e. more efficient! the kfv project designed at the request of the german ministry of finance is the best proof that there is hope for us. this project came up as a result of discussions at the meeting of g8 ministers of finance in may 2007 where a decision was taken to provide assistance to the development of capital markets in two countries, serbia and ukraine. this assistance will take the form of technical support with a special emphasis on “ the development of the securities market in local currency to support the development and stability of the financial sector ”. at the moment efforts are being

the state level, let alone applications for combinations of insurance and banking. just a few days ago, the house of representatives almost voted on a massive re - write of the laws on permissible bank holding company activities and is now scheduled to consider the issue early next month. it is difficult to predict the outcome of that bill, and i will not. but i will note that the pressures of market developments for changes in the rules set up during the great depression are immense. if congress does not act, loopholes and regulatory changes will continue to be exploited - with or without bank participation. the forces of technology and globalization will deregulate in one way or another. i and my colleagues would prefer that the congress would guide those changes in the public interest, but legislative deadlock will not do the job because the status quo will not hold. the fourth major force transforming the banking landscape is the globalization of banking and financial markets. indeed, globalization has been reshaping not only the financial, but also the real economy for at least the last three decades. the interactions of developments in both the financial and real economies have expanded cross - border asset holdings, trading, and credit flows. in response, financial intermediaries, including banks and securities firms, have increased their cross - border operations. once again, a critical result of this rapid evolution has been a substantial increase in competition both at home and abroad. today, for example, almost 40 percent of the u. s. domestic commercial and industrial bank loan market is accounted for by foreign - owned banks. the final significant trend i will highlight is the on - going consolidation of the u. s. banking industry. i think that it is fair to say that the american banking system is currently in the midst of the most significant consolidation in its history. as i mentioned earlier, in the last two decades nearly all of the traditional barriers to geographic expansion of u. s. banks have crumbled. while the states took the lead in eliminating these barriers beginning in the late 1970s, the final step was taken by the federal government with passage of the riegle - neal act in 1994. under this act, virtually full interstate branch banking became possible in june 1997. a few facts will perhaps give you a feel for the profound changes occurring in the structure of the u. s. banking system. in 1980 there were about 14, 400 banks in the u. s. organized into about 12, 300 banking organizations. by the end of 1997, the