The National Bank of the Republic of Macedonia has made the following statement with regard to certain press reports on the foreign banks’ positions vis-a-vis the Republic of Macedonia
The National Bank of the Republic of Macedonia has made the following statement with regard to certain press reports on the foreign banks’ positions vis-a-vis the Republic of Macedonia: The Vienna Initiative Quarterly Report (Quarterly Deleveraging and Credit Monitor Q4 2013[1]) states that the BIS reporting banks reduced their external positions to the countries of Central, Eastern and Southeastern Europe (CESEE) in the fourth quarter of 2013. These comments are based on the data published on the BIS website, in the "Statistics" section on the following link http://www.bis.org/statistics/bankstats.htm. The indicated amounts of US Dollar 380 million are given in Table 6, which refers to the external positions of the BIS reporting banks vis-a-vis individual countries.
However, the analysis in the Vienna Initiative Quarterly Report shows changes only with the claims, and not the changes in the liabilities to the respective countries, which reduced by US Dollar 505 million in the fourth quarter (in the same Table).
We would also like to clarify that the foreign banks' claims represent liabilities towards non-residents for the Macedonian entities. The National Bank releases data on external liabilities, according to the criteria and methodology prescribed by the IMF (BPM 5). Hence, in our data we show the total external debt of the Republic of Macedonia to all non-residents, allocated in terms of the sector of the domestic borrowers, while the sector and the country of the foreign partner can not be identified. In that regard, a clear parallel between the BIS statistics and the statistics of the National Bank is not entirely possible. Accordingly, we primarily want to emphasize that the domestic statistics contains the same data as those disseminated in the Vienna Initiative Report, but the manner of presentation is different, as can be seen through the NBRM External Debt data, the Balance of Payments data, as well as within the Monetary Statistics.
We would like to emphasize that no actual outflow of capital from the country has occurred. The amounts indicated in the Report, basically do not refer to commercial banks in RM and do not represent outflows of funds from domestic banks towards abroad. The decrease in the liabilities is mainly associated with the National Bank of RM. Namely, in the fourth quarter, there was a decrease in the liabilities of the National Bank (the Monetary Authority) on the basis of short-term loans to foreign commercial banks. These liabilities arise from the repo transactions the National Bank performs with various foreign commercial banks, and are part of the operations related to foreign reserves management. The National Bank also performs reverse repo transactions, thus creating approximately the same amount of claims, once more as part of the operations related to foreign reserves management. In this period, besides the decrease in the NBRM's liabilities a decrease in the claims of RM was registered, as well.
The risks that the domestic banking sector creates regarding the stability of the balance of payments are considered small. This conclusion stems primarily from the characteristics of the domestic banking sector. Тo finance their activities, domestic banks mostly rely on domestic sources. The deposits of the domestic private sector create about 60% of the total banks' liabilities. The deposits of the non-residents contribute only 2-3% and in the last three years, after the escalation of the European debt crisis, they are fairly stable, i.e. significant outflows through this channel have not been registered. The financing through foreign credit lines, which accounts for around 6-7% of total liabilities, is also minor. A large portion of these liabilities relates to the credit lines from MBPR and open credit lines with parent banks. Also the loans that our banks extend abroad are negligible. Hence, it can be concluded that the exposure of the banking system to abroad is not in such a scope and character to create risks of "sudden" capital outflows.
Last year, the NBRM adopted measures that are expected to stimulate capital inflows through the banking sector. These measures refer to the changes in the reserve requirement instrument (adopted in July 2013), which, among other things, introduced a reserve requirement allocation rate of 0% for banks' liabilities to non-residents - financial companies, with contractual maturity of over one year, as well as for all liabilities to non-residents with contractual maturity over two years. This measure is expected to stimulate the inflow of long-term capital, to contribute to more stable capital flows at the expense of discouraging of short-term and volatile flows. Such measures lower the risks of disturbances in the balance of payments.