Petar Goshev: Brief overview of the financial crisis and its impact Opening speech by Mr Petar Goshev, Governor of the National Bank of the Republic of Macedonia, at the international economic forum “Faster towards the European Union”, organized by the Economic Chamber of the Republic of Macedonia, Ohrid, 2 November 2008. *  *  *  Honorable President Azevski, Dear presidents, business leaders, honorable excellencies, ladies and gentlemen. Let me thank Mr. Azevski for the given honor to speak in front of you this evening, in this exceptionally turbulent, exciting and at the same time challenging period in the economic and financial history of the world. From the invitation I can read that I have the honor to address representatives of ten countries in the region, primarily people who face all sorts of challenges in solving the puzzles from the real economic life, every day. From the statistics I looked through, I may conclude that I have the pleasure to speak in front of representatives of nearly 64 million citizens (63.89 in 2007), whose GDP was around 507 billion Euros altogether in 2007, as opposed to the GDP of 40,000 billion achieved by the world (i.e. 1.27% of those 40,000 billion), in front of the representatives of the 64 million citizens who during the same year exchanged goods and services with the rest of the world in the amount of 295 billion Euros, as opposed to the 20.4 thousand billion of realized foreign trade of the whole world, i.e. a share of 1.43%.
This will lead to increasing the confidence in the financial system. The Basel Committee on Banking Supervision and the Board for International Accounting Standards have already undertaken certain activities. •  The regulation on determining and measuring banks' solvency deserves special attention. The appropriate level of capital is the main anchor for a stable banking system. When this issue is discussed internationally, primarily a reference is made to the New Capital Accord, the so-called BASEL II. It is being criticized even before its full implementation and therefore it is inappropriate to refer to it as one of the reasons for the current crisis. However, it is important to mention that draft amendments have already been prepared as a response to the new developments. Those are, inter alia, the following: -  Improvement of the manner of covering the risks arising from the use of structural financial products. -  Changes in determining the capital necessary for covering the risks from banks' trading portfolio, especially of those instruments characterized with lower liquidity on the market. -  Measures for reducing the effects from the economic cycles on the level of the capital requirement. The purpose is: to allocate more reserves in periods of expansion in order to provide sufficient capital for covering the losses in times of crisis. This is Spanish experience, known as "dynamic provisioning". -  Expanding of the type of data which the banks will be obliged to disclose.