9  8  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  8  official interest rates to close to zero and expanded their balances sheets progressively by around $ trillion or 13% of global GDP (Chart 8). Chart 8: Central Bank Balance Sheets  20000  USD (billions)  18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2006  2007  2008  2009  Fed  2010  2011  2012  ECB  2013  BoJ  2014  2015  BoE  2016  2017  2018  SNB  2019  2020  Total  Source: Respective central banks and Bank calculations. Interestingly, this rapid growth in central bank money creation was not mirrored in money spending growth in the economy. In the ten years prior to the Covid crisis, narrow money globally rose by over 150%, while money spending globally rose by less than 50%. In the UK this contrast was starker still, with central bank money rising by around 200%, while money spending rose by less than 50%. 11 One way of reconciling these diffuse trends in the monetary and real sides of the economy comes from looking at a different measure of money - commercial bank money.
In 1995, the monetary strategy of stable exchange rate of the denar was formalized – a strategy for which then and now there is a broad consensus that it is one of the key pillars of the stability of the Macedonian economy. The benefits of macroeconomic stability have been enjoyed for 24 years. Our economy is small, commercial and financially open and hence, prone to external shocks. Despite the numerous external and internal shocks, the National Bank constantly succeeds to keep inflation at a moderate level, which is similar to the European level. Low inflation is extremely important for the protection of the real purchasing power of citizens, but also for maintaining the competitiveness of our exports without which small economies like ours can not achieve higher and sustainable growth. The maintenance of low and stable inflation, as the main goal of the central bank, is underpinned by the stable exchange rate of the domestic currency against the euro. The prudent monetary policy, as well as the good coordination with other macroeconomic policies, led to an almost continuous growth of the foreign reserves, which today are at the highest historical level and directly strengthen the exchange rate stability. Confirmation of the soundness of the policies implemented by the National Bank is a historic step in providing access to European Central Bank’s foreign exchange liquidity. The key to the successful attainment of the goals of the National Bank so far is its strong institutional capacity which has been built for years.