Successful completion of the Twinning Project: "Strengthening of the institutional capacity of the National Bank in the process of its accession to the ESCB"

Successful completion of the Twinning Project
Strengthening of the institutional capacity of the National Bank in the process of its accession to the ESCB

The National Bank is continuously working for the adoption of best practices and standards that are bringing it closer to the European System of Central Banks. This strategic orientation was confirmed last year. While responding swiftly and timely to the challenges posed by the pandemic, the National Bank through the project activities, continued its efforts to strengthen its institutional capacity in key areas. This enabled the bank to better fulfil its goals and tasks, thus significantly contributing to the economic development of the country to the benefit of all citizens and companies.

These are some of the messages from the conference that marked the successful completion of the EU-funded project Strengthening the institutional capacity of the National Bank in the process of its accession to the ECSC. The project was  implemented over the past eighteen months, with a number of expert missions and exchange of experiences and expert views. The central banks of Germany and Croatia were the main twinning partners of the National Bank, while the central banks of Belgium, Greece, Lithuania, Portugal, Romania, Slovakia and the Netherlands contributed to the project. As presented at the conference, the project delivered significant results in four project components: payment services and systems, banking regulation and supervision, financial accounts statistics, and know-how in policy analysis.

“The deliverables of this project are another stepping stone of our central bank towards full compliance with the best European practices and standards, and thus towards membership in the European family of central banks. This project shows that even in a disorderly environment, when we are overwhelmed with daily policy actions and decisions to cope with pandemics-related challenges, we have remained committed and well anchored to our strategic goals. At the same time, it also demonstrates the cohesion of central banking community and its mutually supportive role in keeping pace with innovations, for the benefit of our societies. Although this Twinning commenced before the pandemic, it certainly enhanced our capacity in areas that are playing pivotal role in these unprecedented times”, said Governor Anita Angelovska Bezhoska in her introductory address, also referring to the project deliverables within the four project components.

Ambassador Geer of the EU Delegation highlighted that the project has strengthened several important components of the complex central bank framework. It also stressed that the EU support falls within an already encouraging trajectories of good Bank’s reforms and policies’ decision. He emphasized the broad international consensus on the National Bank ability to respond rapidly and comprehensively to mitigate the economic impact of the pandemic. In addition, on monetary policy, he mentioned the latest EC Report stating that the alignment of the country’s legal framework with the EU acquis is at an advanced stage. Finally, he confirmed that the European Union remains committed to support the reforms’ path of the National Bank; the EU Delegation and the National Bank are developing another project to keep on strengthening the capacity of the latter to perform its duties and aiming towards the long-term goal of the European System of Central Banks.

“Twinning is indeed a tool for successful sharing of knowledge and experience. Even more, it is a tool for bringing nations together, for developing good and close neighborly relations, as well as for learning from our beneficiaries. With this said, we sincerely believe that valuable Croatian know-how was reflected and recognized in all components of this project where Croatian experience was involved specially when it comes to achieving the main purpose of the project. In that context, I’ve learned from the project leader that valuable cooperation was established with Croatian experts and that beneficiary was very satisfied with the work of our experts and that some additional activities were realized that were not planned at the beginning of the project. Therefore I would specially like to emphasize that Croatia is grateful for the invaluable experiences gained through cooperation with our partners in North Macedonia”, said the Ambassador of the Republic of Croatia, Nives Tiganj.

Reflecting on the National Bank monetary policy since the monetary independence in 1992, in the context of the meaning of the Twinning Project, the Deputy Head of Mission and Head of Economic Section, Embassy of the Federal Republic of Germany, Otto Graf, noted:

“How far North Macedonia has come since then. Today the Denar is linked to the Euro at a fixed exchange rate without floating. And - thanks to very stable currency reserves of the National Bank of North Macedonia - this is a very sustainable currency policy. But as it is never a good idea to rest on your laurels, the National Bank is constantly improving its monetary services and policies. Germany is very proud that this Twinning Project could be carried out in cooperation between the National Bank of North Macedonia, the Croatian National Bank and the Deutsche Bundesbank.“

Regarding the project activities, he said that they are important as North Macedonia is on its way to the European Union and such improvements are a prerequisite for the future EU accession.

Burkhard Balz, a Member of the Executive Board of the Deutsche Bundesbank, also had an address: “I am very pleased and proud to say that we have successfully met the ambitious objectives of our project – despite the challenging times we are currently facing.“

“In view of the challenges brought about by the COVID-19 pandemic, the project’s topic could not have been more relevant. The pandemic has made significant demands of central banks, too. Around the globe, they have had to step in to stabilise financial systems and prevent credit supply shortages that would have compounded the already severe drop in real activity. First and foremost, this meant monetary policy measures. However, the pandemic has affected other central bank tasks, too, such as banking supervision, financial stability and providing the economy with cash and cashless payment facilities. In other words, the pandemic has underscored once again that central banks must be able to act swiftly, resolutely and sometimes creatively – at any time and across all areas. To ensure this, having sufficient institutional capacities is paramount. This, in turn, can be best achieved by exchanging best practices, by learning from one another and developing shared ideas. The EU twinning projects are an ideal platform for doing exactly that”, said Balz.

Boris Vujčić, Governor of the Croatian National Bank, also took part in summarizing the results of this important twinning project. In his address, he reminded that this project is preceded by successful cooperation of experts from our and the Croatian Central Bank: “Such close and fairly regular cooperation of our staff also included the exchange of experience on various tasks that central banks usually take care of, and I very much look forward to continuing this good cooperation between our two central banks.”

“This twinning project is one of the many endeavours that bring North Macedonia closer to the EU membership… …Although at first sight it may seem that the project activities implemented and results achieved are not so attractive to the general public, they are definitely very important for the Macedonian financial services' community and the economy as a whole”, said Vujčić.

He also said, “As I heard from my colleagues, most of them had no previous encounters with a twinning project, but they managed their tasks efficiently and also learned a lot themselves. Sharing their knowledge with our Macedonian colleagues gave them the opportunity to update their own proficiency as well. I also need to emphasize that they encountered a high level of commitment, professionalism and competence from the Macedonian staff.”

In the second part of the event, the component leaders presented the achievements in the four project components. Among other things, a review was given of the future improvements in payments and in the internal liquidity assessment process. , improvements in claim collection and non-performing loan management by creditors. In the field of statistics, the focus was on the financial accounts statistics, having in mind that part of the activities in this project were related to the development of financial accounts - flows, and the design and establishment of calculation methods and data sources for preparing quarterly financial accounts – stocks and flows. Also, results were presented of the research on the relationship between the real and financial cycles in the Macedonian economy by applying a dynamic stochastic general equilibrium model (DSGE model) with partial euroization, for which research paper was recently presented at the National Bank Researchers Club.

All the above once again confirms that this EU-funded project worth Euro 600,000 and its deliverables available to the National Bank will bring even more noticeable achievements for the benefit of the citizens and companies, and the economy as a whole.