Today, the National Bank of the Republic of Macedonia Council held its fourth session
Today, the National Bank of the Republic of Macedonia Council held its fourth session.
At the session, the Council adopted the Annual Report for 2014.
Amid post-crisis recovery of the world economy, monetary policy, as in previous years, was conducted in accordance with the accomplishment of the main goal of maintaining price stability, by keeping a stable exchange rate of the denar against the euro.
During 2014, inflation decelerated and on the average it reduced to -0.3% annually, due to lower prices of fuel and food. At the same time, core inflation, which excludes energy and food prices, averaged 0.5%. During 2014, the foreign exchange market was balanced, with a relatively small amount of interventions on a net basis. The level of foreign reserves and indicators for their adequacy were maintained at a solid level during the year, and the policy rate remained unchanged.
Despite the fragile recovery of the foreign effective demand, in 2014 the Macedonian economy registered substantial acceleration in real GDP growth of 3.8%. The growth was mainly driven by domestic factors, primarily investment and exports, with the investments consisting predominantly of public investments, especially those in infrastructure, and foreign direct investments. New companies with foreign capital in the technological and industrial development zones have led to exceeding the expectations regarding the increased exports and reduced trade deficit. Important features of 2014 were the further gradual decline in the unemployment rate, and the growth of labor productivity.
In 2014, in order to strengthen the effects of the set of monetary instruments applied and further redistribute excess liquidity in the banking sector toward support of the economy, changes were made in part of the monetary instruments. The implementation of the measure for reducing the base for the reserve requirement for the amount of the new loans extended to net exporters and domestic producers of electricity aimed at further supporting of the credit growth, was extended.
At today's session the National Bank Council adopted also the Report on the Risks in the Banking System in 2014. The overall stability of the Macedonian banking system increased also in 2014, amid almost double-digit annual growth of loans to non-financial entities. Enhanced lending activity was particularly evident in the segment of corporate customers, where the annual credit growth of 8.6% is 50% higher than the growth recorded in 2013. Household credit growth has been accelerating for two consecutive years. Deposits of non-financial entities also registered double-digit growth rate of 10.7%. Denarization of the banks' balance sheets continued, being more prominent on the liabilities side.
In 2014, the growth in net interest margin continued, mainly due to the sharper decline in deposit compared to lending interest rates. Reduced operating costs of banks point to greater cost-effectiveness. The share of non-performing loans in the total loans reached 11.3%. Liquidity position of the banks is one of the main pillars of the overall stability of the banking system, while the solvency position and capital adequacy ratio that is twice higher than the prescribed minimum are in the foundations of the resilience of the banking system in the Republic of Macedonia.
The main challenge for banks in the period ahead will be to maintain optimal credit support for the non-financial sector, simultaneously reducing the credit channel impairment, which would in return affect profitability, capital stability and liquidity of banks.
At today's session a new Decision on the credit of last resort was adopted. Following the experiences of central banks of the euro area, beside the current possibility of approving credit of last resort to banks against a collateral of debt securities, foreign currencies and banks' claims on the National Bank, the new Decision introduces the possibility of extending this credit also against pledging banks' claims on customers. This modality of the credit of last resort is planned to be activated if the bank does not have debt securities and foreign currencies. The Decision specifies the types of claims that are acceptable for the National Bank as collateral for the credit of last resort.
Acting in accordance with the Information on the design of the new banknotes of 200 and 2000 denars, which was accepted at the session held on 14 November 2014, at today's session the National Bank of the Republic of Macedonia Council adopted the Decision on the issuance and the main features of the banknotes in denomination of 200 and 2000 denars. With the adoption of this Decision, the activities necessary for printing and putting the new banknotes into circulation continue.
At today's session, the Council also adopted the Decision amending the Decision on the conditions and manner of operation of savings houses and the Decision on the information system security of a savings house. Both decisions are aimed at strengthening the standards for the operation of savings houses.
The Council also adopted the Decision amending the Decision on the content and functioning of the Credit Registry, aimed at harmonization with the provisions of the Law on personal data protection.
The Council also discussed other matters within its jurisdiction.
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