The currency board arrangements are not just another monetary policy regime. They are a “frame of mind”, a way to view and tackle the economic, political and social processes. Some Western analysts and researchers fail to understand this. But I am sure the contributions by my colleagues from the BNB will clearly illustrate during this conference that the currency board is something more than just a monetary policy regime. Following a dramatic banking and financial crisis in 1996–1997, the economy was stabilised by the introduction of the currency board arrangements, in combination with the strong fiscal  BIS central bankers’ speeches  1  discipline, the liberalisation and privatisation of the Bulgarian economy, and the use of a broad range of macroprudential instruments. The current global crisis is not the first one successfully weathered by the Bulgarian economy. In only two decades we have endured the Asian crisis, the Russian Crisis, the “dotcom bubble” burst, the U.S. subprime crisis and the failure of Lehman Brothers, before the euro area financial and sovereign debt crisis came in. But the recent crisis has served as perhaps the biggest “litmus test” for the optimality of our monetary policy regime. We believe that a small open economy, which is not rich in certain commodities or natural resources, cannot succeed in pursuing the so-called independent monetary policy. All these issues will be elaborated today by deputy governor Hristov who will share our experience with you during the afternoon session of this conference.
But since the end of 2008, the BNB focused on the capital and liquidity relief for banks while also allowing them to ease lending. As a result of these conservative and countercyclical policies of the BNB, and the rather prudent behaviour of the banks themselves, today Bulgaria manifests a very stable banking sector, with outstanding capital adequacy and liquidity ratios. Four years after the Lehman Brothers collapse, the banking system of Bulgaria remains one of the few in the EU where no single bank needed to be rescued or supported with taxpayers’ or central bank money. Merging the monetary and macropdudential mandates (including banking supervision) under the auspices of the central banks is currently being implemented in some of the “older” EU Member States. The macroprudential oversight of the financial system is being introduced only recently at the EU level. While these new concepts are now being embraced by central bankers and politicians worldwide, the simultaneous pursuit of both monetary and banking stability, from a true macroprudential perspective, has been the order of the day for the BNB for more than a decade now. Through our own painful experience with a crisis in 1996–1997, we became fully aware of the systemic importance of the financial system. Thus a key element behind the success of the overall policy mix in Bulgaria is that our central bank is entrusted with the tasks and responsibilities to regulate and supervise the banks in the country, with the goal of ensuring the stability of the banking system.