Interview for "European Union Newsletter", July, 2001

INTERVIEW WITH THE GOVERNOR FOR THE EUROPEAN UNION NEWSLETTER - July, 2001

In an interview for the European Union Newsletter, the Governor of the National Bank, Ljube Trpeski, spoke about the central financial and economic role of the Bank and the importance of the European Union funded assistance programmes.

·          What is the role and position of the National Bank in financial regulation and general governance?

According to the regulations, the National Bank of the Republic of Macedonia (NBRM) is an important and pivotal institution. As a central bank, the National Bank is required to preserve the stability of the domestic currency (internal and external), to outline and implement the monetary policy, regulate the liquidity in the country and international payments, and maintain the stability of the overall banking system. Taking into account price stability as an ultimate goal of monetary policy, the role of the National Bank is therefore significant regarding the maintenance of the macroeconomic stability in the economy. Moreover, it should be stressed that the independence of the National Bank from the executive power is guaranteed by law. Over the period of implementing this strategy, the National Bank has proved to be successful in preserving the price stability (among the most successful economies in transition) accompanied by positive GDP growth rates. The Bank has been actively included in the negotiations with the IMF and in the process of outlining macroeconomic policy. Furthermore, as an institution responsible for the Banking system and its operations, the Bank has the authority to establish rules and regulations for the banks’ operations.

·          How do you see the future development of the National Bank and what part does EU technical and financial assistance play in that process?

Our ambitions are directed towards the development of modern central banks, which according to all criteria converge towards the European Central Bank (ECB). The new Law on the National Bank of the Republic of Macedonia (not adopted yet) has been prepared in compliance with the regulations of the ECB, which will hopefully provide a higher level of independence for the National Bank. An important factor for the development and growth of each institution is to have skilled and well-trained staff. In this light, the National Bank cooperates with several central banks where the National Bank of the Republic of Macedonia employees have an opportunity to be trained on numerous courses and seminars. Furthermore, the EU-funded technical assistance in bank supervision of the National Bank has further enhanced the supervisory procedures and functions. In particular, special attention should be paid to the cooperation with the Central Bank of the Netherlands, which for two years provided technical assistance under the European Union PHARE program. Moreover, the newly acquired RTGS (Real Time Gross Settlement) system is an important segment of the overall reform of the payment system and was co-funded by the National Bank and the EU, which provided EURO 1.46 million.

·          How will macroeconomic modeling affect budgetary and development projections made by the National Bank, and what impact might this on Government policy and national economic development?

The preparation of the econometric model (Macmodel), which is in the initial stages of development, is one of the projects within the technical cooperation with the Netherlands Central Bank. The model encompasses all major macroeconomic variables and their interactive relations. It is especially important that the model can be used for simulations and anticipations, and can therefore be used for outlining macroeconomic policies and making macroeconomic projections.

·          How does the National Bank intend to address the introduction of the EURO in early 2002 and what effects might this have on this country?

The National Bank plans to undertake an active programme concerning the exchange of EURO banknotes with the national currency. This will be achieved through numerous multilevel preparatory activities and targeted information campaigns.