Skopje, 7 March 2023

At its meeting held on 6 March 2023, the Financial Stability Committee adopted the Annual Report on the Operations of the Committee for 2022. The Annual Report states that the financial system in the country is stable, despite the further geopolitical tensions arising from the military invasion of Russia over Ukraine, as well as the global challenges related to the energy crisis and the high inflation rates. However, amid increased uncertainty, there is a more pronounced need for thorough risk assessment, adequate risk management and further capital building in order to provide greater capacity of financial institutions to absorb risks.

The Report also points out that the National Bank, in December 2022, changed the macro-prudential measures, i.e. it increased the rate of the countercyclical capital buffer for the exposures of the banks to the clients in the domestic economy. Although for the time being there are no signs of materialization of credit risk in banks' balance sheets, the increase in the rate of the countercyclical capital buffer acts preventively, i.e. it contributes to further strengthening of the capital strength of domestic banks, which strengthens the stability and resilience of the banking system, and thus the overall financial stability. 

The entry into force of the Law on Financial Stability established the legal framework for implementation of the macro-prudential policy in the Republic of North Macedonia. The Financial Stability Committee is established as an interinstitutional body responsible for monitoring the implementation of the macro-prudential policy in the country and for coordinating activities for identification and monitoring of the systemic risks in the individual segments of the financial system, when taking macro-prudential measures and preparing for and managing financial crises. The Law on Financial Stability assigns explicit competences to the financial system regulators to take macro-prudential measures aimed at reducing vulnerability and increasing the resilience of the individual segments of the financial system they are responsible for. Thus, the competent regulators, individually and together through the work of the Financial Stability Committee, contribute to achieving and maintaining financial stability. 

The Committee is constituted of all financial system regulators in the country, i.e. the National Bank, the Ministry of Finance, the Securities and Exchange Commission, the Agency for Supervision of Fully Funded Pension Insurance and the Insurance Supervision Agency. The Committee is chaired by the Governor of the National Bank, and in conditions of financial crisis, it can also be chaired by the Minister of Finance, if the Governor and the Minister decide so. Such structure enables consistent implementation of the recommendations of the European Board for ensuring an efficient mechanism of cooperation between all the institutions with competences in the domain of the financial system.