Dear participants to the Conference,

The banking sphere is a "blood circulating system" of economy, which directly influences fulfillment of our objectives set forth for the first five-year period of the 21st century.

Whereas in the previous years we had been working on overcoming the crisis processes in economy and monetary sphere, today there is a need to move forward and to ensure transition to a non-inflation-based economic growth, consistently approaching the European living standards.

The year 2001 proved to be a year of substantial advances in the monetary and crediting policy. However, the banking system, being of the main tools for realization of the Programme of social and economic development of our country, has not been sufficiently consolidated yet.

A lot of problems must be addressed in this sphere; otherwise it will not be possible to move forward.

First, insufficient financial potential of the banking system.

Whereas the Republic of Belarus closely approached the level of 1990 in major macroeconomic specifications, the banking system parameters remain on a considerably lower level.

At present the aggregate capital of the banking system does not exceed 4.7 per cent of the GDP, which is considerably less that the similar indicators not only in developed countries but also in main developing countries, this being an evidence of low capitalization of the banks.

That is why an objective is set forth - to reach, stage by stage, the level corresponding to the world standards.

Second, reliability of banks and level of service being rendered to clients, that is to citizens of the republic and enterprises.

All of us remember the recent high-profile scandalous affairs of a number of the so-called "commercial" banks. Their activities were not aimed at crediting the real sector of economy, nor were they focused on search of effective investment projects and their realization.

The purpose of their activities was seen by them in getting an immediate profit and they were pursuing a risky, sometimes an adventurous policy. In doing so, they were speculating in ordinary people's trust. The results are sad.

Therefore, strengthening of the public confidence to the banks and, hence, to the state itself must turn into the main objective of the National Bank, the Government and all the bank workers.

Third, crediting policy of the banks in serving the real sector of economy and social programmes.

We have to learn how to use monetary resources effectively. Selection and encouragement of effective projects, control over the targeted use of granted credits must become a priority matter in the work of the banks.

Fourth, supervision and control over the bank activities.

Stable work of the banks is dependent not only on the amount of the authorized capital stock. It is rather influenced by the funds allocation policy, by probity of the management staff and bank workers.

The main purpose of the Nation Bank supervision is not in "arithmetic" calculations of economic norms, but in development of risk assessment methods and in improvement of the analysis of the financial status of crediting organizations.

The National Bank, acting in close interaction with other banks, fiscal, controlling and law enforcement bodies, must reveal and suppress any illegal operations and, above all, declare "war" against unlawful circulation of cash money.

Fifth, personnel policy.

Flaws in the personnel policy are the main cause of grave crimes in the banking sphere. In 2001 the internal affairs bodies revealed 77 grave crimes, including 19 property thefts committed due to power abuse, 10 embezzlements, 38 frauds. There were 3 cases of abuse of official power or authority and 3 cases of forgery and other offences.

Sixth, quality of credit portfolios.

Bank managers must be made maximally responsible for the quality of the credit portfolios. Excuses referring to low paying capacity of enterprises shall not be accepted.

Seventh, the mechanism of credit repayment through the guarantees of the central and local governments fails. We must no longer put up with it. Order must be established both within the system of granting guarantees and in repayment of the credits granted.

Eighth, involvement of the state in the authorized capital stock of the banks.

Today the share of the state in the aggregate equity capital of the banking system amounts to about 80 per cent.

Hasty, without prior creation of necessary conditions for that, withdrawal of the state from the authorized capital stock of the banks may result in negative consequences, and not only in the banking sphere.

Ninth, role and responsibility of the state representatives in the authorized banks must be enhanced.

The state representatives in the administrative bodies of the banks must be made more responsible for the supervision carried out by them and for the objectivity of their information pertaining to the financial condition of the supervised banks.