But as the weight of exchange rate-linked items in domestic balance sheets declines, and as confidence rises and the foundations for the exchange rate itself are strengthened, monetary policy can devote greater attention to the slack in the economy and the inflation outlook. In this context, three factors are most important: returning domestic financial institutions to full functionality, converting foreign-denominated debt to domestic currency, and restoring access to foreign credit and financial markets. It is important to enhance the effectiveness of the Central Bank’s monetary policy instruments and improve the transmission mechanism of monetary policy. While confidence in the financial market remains limited, the Central Bank’s policy instruments will not be fully effective because, under these circumstances, financial institutions have every reason to consider it more beneficial to do business with the Central Bank than among themselves. The Central Bank has set a framework for the money market, foreign exchange market, and bond market, thereby contributing to their resurrection, in co-operation with the authorities and the financial institutions. At this point in time, it is primarily the bond market that has  BIS Review 39/2010  3  shown signs of recovery. However, financial institutions’ conduct still shows that they are uncertain about the future, and the premises for trading are distorted to some degree. Finding a solution to this will be an important task in the coming months. At present, investment in Iceland is close to a post-WWII low.
By this measure, we are aiming to: support the process of deeuroization in the economy, inject liquidity in support of lending to the private sector and stimulate higher inflows from nonresidents especially from financial institutions. Last, but not least, I would like to point out our efforts in strengthening our statistics in the last few years. In March 2013, the National Bank of the Republic of Macedonia started transmitting the quarterly balance of payments and annual international trade in services data to Eurostat, while in May 2013 additional data series on FDI flows and stocks disaggregated by partner countries and activities were submitted. Currently we are working on the establishment of new data warehouse system in the central bank that will contribute for improved data management in general, as well as enable the transmission of more demanding and detailed datasets in the future. In July 2012 we started with submission of a more detailed set of the external debt data to the World Bank within the Quarterly External  2  BIS central bankers’ speeches  Debt Statistics Database in accordance with the requirements for SDDS countries, thus being among the first countries in the region fulfilling the overall data requirements in this field. In addition, just recently, we have received the first Annual Report by the IMF on data submission under SDDS, that we joined in November 2011, with positive annotations of the overall data submission under this system.