PRESS RELEASE
On the meeting of the Central Bank Governors of South Eastern Europe in Thessaloniki, Greece

At the invitation of Mr Nicholas C. Garganas, Governor of the Bank of Greece, the Governors of the Central Banks of Albania, Bulgaria, Bosnia and Herzegovina, Cyprus, Former Yugoslav Republic of Macedonia, Greece, Montenegro, Romania and Serbia, as well as the Heads of the two Supervisory Authorities of Bosnia and Herzegovina, met in Thessaloniki on the 8th of February 2008. The meeting was held within the framework of the multilateral Memorandum of Understanding that was agreed at a meeting in Athens in July 2007 and aimed to further advance co-operation in the area of banking supervision in South Eastern Europe (SEE) and safeguard financial stability in the region. The discussions at the meeting took into account the conclusions of a Meeting of Heads of Banking Supervision Departments that was held in Thessaloniki on the 18th of January.

The Central Bank Governors noted that the consequences for the SEE economies of the ongoing turmoil in the international financial markets have been indirect and limited until now. They also acknowledged heightened uncertainties to the outlook of SEE economies stemming from a possible further deceleration in the growth rates of world output and trade in the event the turmoil persists. Against this background, they stressed the importance of sound financial and economic fundamentals. In light of the rapid credit growth observed in many countries of the region, their supervisory authorities were closely monitoring credit developments to safeguard the quality of the banks' loan portfolio and financial stability. It was also important for macroeconomic and structural reform policies to be strengthened in many of the countries of the region with a view to containing inflationary pressures and the external current account imbalances. Large current account deficits, especially if they reflect low savings rather than productive investment, could weaken growth prospects and investor confidence.

The Central Bank Governors decided to accelerate the implementation of the multilateral Memorandum of Understanding with a view to achieving convergence of supervisory practices, including those relating to money laundering and the financing of terrorism, and risk assessment. Towards this end, the experience gained from the implementation of the corresponding European Union framework as well as the principles established by the Basle Committee on Banking Supervision will be utilised, while national institutional and legal arrangements will be respected. It was agreed that issues of immediate priority would be the identification of those areas in which convergence of supervisory practices should be pursued, the undertaking of joint field examinations of cross-border financial institutions, and a joint evaluation of the stress-testing exercises that are being undertaken in each country.