Honorable Minister of Finance Minoski,
Dear President of the Banking Association Mitrovski,
Dear representatives of regulators and operators of payment systems and securities settlement systems,
Distinguished representatives of the banking and corporate sector,
First, allow me, on my own behalf and on behalf of the National Bank of the Republic of Macedonia, to thank you for your presence at today's promotion of an important project that will provide benefits for the National Bank, the banking sector and the overall Macedonian economy.
What is this project about? In early 2017, the National Bank began operating a system for cross-border payments in euros, by connecting the Macedonian Interbank Payment System (MIPS) with TARGET 2 (Trans-European Automated Real-Time Gross Settlement Express Transfer System) of the Eurosystem. For this purpose, the NBRM’s MIPS was upgraded to making euro payments and connecting to TARGET2 through the Bank of Italy. Thus MIPS has grown into dual-currency system for payments in denars and euros.
The promotion of this major project as such is the second generation of reforms in the payment infrastructure, after the first significant payment operations reform in 2001. This project proves that the National Bank follows the strategic determination of the Republic of Macedonia to EU membership.
For Macedonia, as a small and open economy, where most of the foreign trade is with countries of the European continent, it is important to have correspondent channels for making payments in euros. Also, citizens and our emigrants have a need of secure cashless transfers in euros. However, globally, including Europe, correspondent banking arrangements have decreased in recent period, primarily due to two groups of factors. The first group includes economic factors. Setting of single-currency payment infrastructure and consolidation of the banking sector in general decreased the correspondent banking arrangements. The second group of factors includes anti-money laundering and combating the financing of terrorism (AML/CFT) regulations that require complex and costly procedures for maintaining correspondent relationships. The narrowing of the possibility of maintaining correspondent banking relationships has increased the importance of the new alternative channel for payments in euros through the National Bank.
This project began in 2013 under the European Commission recommendations contained in the progress reports on the Republic of Macedonia and the NBRM’s Needs Analysis Report within the IPA project conducted by representatives of the European Central Bank and the central banks that form the Eurosystem.
During the implementation process, the National Bank cooperated with the Ministry of Finance and the banks. On this occasion, let me express my gratitude to the Ministry of Finance for its contribution to this important project by amending the Foreign Exchange Law. At the same time, I would like to express my gratitude to the representatives of banks with whom we had active cooperation in the testing of the upgraded MIPS system.
Allow me to give our assurance that the establishment of this alternative channel for cross-border payments through TARGET2 will provide market impetus for less expensive, faster and secure cross-border transactions in euros for the Macedonian companies and households. At the same time, this project of the National Bank aims to support regional connections among capital markets, as it is expected to allow settlement of the cash component of securities transactions in euros.
Last but not least benefit is the development of capacity of the National Bank and banks for future direct connection to TARGET2 and functioning of the Macedonian component of TARGET2 in the process of Macedonia's membership in the EU.
Dear fellow bankers,
We invite you to jointly make this step forward even greater, by active use of this reliable channel for payments in euros and to make possible all our further steps of payment and financial integration in the global world together, easily and less costly.
Eventually, I would like to thank the entire team of experts of the NBRM’s Payment Systems Department and IT Department whose strong commitment and teamwork made the implementation of this reform project possible.
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National Bank of the Republic of Macedonia