The National Bank of the Republic of North Macedonia published its first Report on the Implementation of Macroprudential Policy, setting out how its macroprudential measures are designed and calibrated and what effects they have had. The report frames these actions around strengthening banking system resilience, limiting structural systemic vulnerabilities, and supporting financial stability. Borrower-based measures in force since mid-2023 aimed to reduce the risk of excessive risk-taking by banks and household overindebtedness under looser lending conditions, lowering the likelihood of losses under adverse macroeconomic changes. These measures set rules on how much an individual can borrow by linking loan size to the borrower’s income and or to the value of residential property pledged as collateral, and were described as mainly preventive and broadly aligned with banks’ existing lending practices while signalling that underwriting criteria should at least be maintained for new household lending. A second set of measures focused on strengthening banks’ capital through additional capital requirements in the form of buffers, including the buffer for systemically important banks and the capital conservation buffer introduced in 2017, and the countercyclical capital buffer introduced in 2023, after which the capital adequacy ratio increased by almost 4 percentage points to one of its highest levels in the past two decades. The report also notes that macroprudential policy was institutionalised through amendments to the Banking Law in 2016, with the central bank’s mandate further strengthened by the Financial Stability Law of 2022 and amendments to the central bank law in 2024 that broadened the range of macroprudential instruments. The National Bank indicated it will continue to analyse risks and adjust instruments as needed.
National Bank of the Republic of North Macedonia 2025-05-10
National Bank of the Republic of North Macedonia publishes first macroprudential policy implementation report detailing borrower-based limits and capital buffer effects
The National Bank of the Republic of North Macedonia released its inaugural Report on the Implementation of Macroprudential Policy, detailing measures to enhance banking resilience and financial stability. Borrower-based measures since mid-2023 aim to curb excessive risk-taking and household overindebtedness, while capital buffers have significantly increased the capital adequacy ratio. The report highlights the institutionalization of macroprudential policy through legislative amendments, with ongoing risk analysis and instrument adjustments planned.