EU institutions have praised the National Bank’s performance of the joint conclusions of last year’s Economic Reform Programme. The National Bank’s monetary easing during the coronacrisis has also been assessed as appropriate, North Macedonia’s central bank said in a press release on Monday.
The joint conclusions of this year’s economic and financial dialogue between the EU and the candidate countries emphasized the maintenance of financial stability during the health crisis, and that the National Bank’s decisions and measures have contributed to mitigating the crisis implications on citizens and companies.
“Moreover, the banking sector has adequately responded to the challenges posed by this crisis so far, maintaining sound indicators, again due to the National Bank’s policies. Also, the progress achieved with the operationalization of the National Bank-coordinated Financial Stability Committee composed of all financial regulators, is of particular importance,” read the press release.
EU institutions, it added, also emphasized that the National Bank’s independence is crucial for preserving price and financial stability.
National Bank Governor, Anita Angelovska-Bezhoska, also took part in Monday’s Ministerial Dialogue on the Economic Reform Programme of the EU candidate countries. She expressed gratitude for the high EU assessments for the activities performed by the National Bank under the Programme.
“In her address, Governor Angelovska-Bezhoska noted that this is the first crisis episode when the initial reaction of the National Bank was loosening and not tightening the monetary policy. This time, solid fundamentals and strong official reserve buffers allowed for loosening of the monetary policy and adopting regulatory flexibility aimed to support citizens and companies in need of credit support. Also, the National Bank’s initiative for access to the ECB backstop facility allowed for wider space for accommodative policies,” the press release noted.
She also referred to the current challenges for policy makers, given the lingering uncertainty posed by the health crisis.
“From a central bank perspective, our advantage is that there is still policy room for maneuver, although narrowed. Our policy rate is still in a positive territory, the level of foreign reserves remains comfortable and the banking system stable. Of course we have to be vigilant, and not only of conventional side effects of ‘too loose for too long’ stance, but also of the possible adverse feedback loop between real and financial sector, as well as of the so-called ‘zombification’ risk. Shielding against those risks asks for further strengthening of the financial safety net, which will remain one of our priorities,” said Angelovska-Bezhoska.
In her address, the governor noted that we must not remain oblivious to the pre–pandemic strivings to increase the potential to grow faster, but in a sustainable and inclusive way.
“This requires gradual shifting of the focus back to the pre-crisis structural bottlenecks, as well as to new structural hurdles that will be left as a legacy of the pandemic. Clearly, we as central banks cannot play a main role in these segments, but perhaps a supporting one. In this context, despite many burning issues, we have managed to keep the focus on more structural issues such as digitalization by working on the first national fintech strategy, and on green finance by becoming a member of the international Network for Greening the Financial System and conducting the first survey on the current status of the green finance,” Angelovska-Bezhoska stressed.
The Ministerial Dialogue is held every year. Its goal is to reach common conclusions about the reform activities that will become part of the new Economic Reform Programme, which is part of the country’s EU accession dialogue. The conclusions for the period ahead, which are within the National Bank competence, include maintaining a strong regulatory framework for the financial sector in line with the best international and EU practices, ensuring stable credit risk management and protecting the National Bank independence crucial for preserving financial and price stability.