National Bank of the Republic of North Macedonia (NBRM)

Overview

The National Bank of the Republic of North Macedonia (Народна банка на Република Македонија) is the central bank of North Macedonia, headquartered in the capital city of Skopje. The NBRM serves as the sole institution authorized to issue the Macedonian denar (MKD), the official currency of North Macedonia.

The central bank is responsible for maintaining price stability as its primary objective, while also ensuring the soundness and efficiency of the banking and payment systems. The NBRM operates as an independent institution accountable to the Parliament of the Republic of North Macedonia, with governance through a National Bank Council consisting of nine members: the Governor, three Vice-Governors serving as executive members, and five non-executive members.

North Macedonia is pursuing European Union membership and has undertaken significant regulatory harmonization efforts with European standards. The central bank participates in comprehensive twinning projects with the European System of Central Banks (ESCB), supporting alignment of regulatory rules, policies, and operations with EU and international best practices.

Basic Identity

Classification

Inclusion Justification

What This Entity Oversees

Supervisory Authority:

The NBRM exercises comprehensive supervision over all licensed credit institutions operating in North Macedonia, including domestic banks, saving houses, branches of foreign banks, and other authorized financial institutions.

Licensing and Authorization:

• Issuance of banking licenses to qualified institutions meeting capital and governance requirements
• Approval of significant ownership changes and related party transactions
• Authorization of new banking services and product offerings
• Withdrawal of licenses for serious violations or insolvency

Regulatory Requirements:

Licensing requirements mandate:

• Minimum capital levels (capital adequacy ratios aligned with Basel III standards)
• Fit-and-proper assessments of owners and managers
• Business plans demonstrating operational capacity
• Compliance with prudential requirements and governance standards
• Adequate internal control systems

Prudential Supervision:

The NBRM establishes and enforces prudential regulations covering:

• Minimum capital requirements and capital adequacy ratios
• Liquidity management standards
• Large exposure and concentration limits
• Asset quality standards and loan provisioning requirements
• Interest rate and foreign exchange risk management
• Operational risk management frameworks

On-site and Off-site Supervision:

• Regular on-site examinations to assess institutional condition and compliance
• Off-site monitoring through regulatory reports and financial data submissions
• Stress testing exercises to evaluate institution resilience
• Compliance reviews and regulatory audit functions

Credit Institution Types:

Provision of banking services in North Macedonia is regulated and available only to:

• Banks holding NBRM licenses
• Saving houses (smaller financial institutions)
• Branches of foreign banks authorized by the NBRM
• Payment institutions licensed for payment services
• Institutions for electronic money (e-money institutions)
• Financial companies holding relevant licenses

Regulatory Framework:

The AML/CFT compliance regime is based on:

• Law on Prevention of Money Laundering and Financing of Terrorism
• NBRM regulations on customer due diligence and compliance procedures
• Financial Action Task Force (FATF) Recommendations implementation
• EU Directive alignment (Fifth Anti-Money Laundering Directive)

Supervisory Role:

The NBRM establishes AML/CFT compliance standards for the banking and payment system and monitors institutional compliance through:

• On-site AML/CFT examinations
• Off-site monitoring of compliance programs
• Review of customer due diligence procedures
• Analysis of suspicious activity reporting

Banking Institution Requirements:

• Customer Due Diligence (CDD) procedures for account opening
• Know Your Customer (KYC) verification and ongoing monitoring
• Beneficial Ownership Identification (BO identification requirements)
• Suspicious Activity Reporting (SAR) to the Financial Intelligence Unit (FIU)
• Enhanced Due Diligence (EDD) for high-risk customers and jurisdictions
• Sanctions screening and export control compliance

Enhanced Due Diligence:

• Politically Exposed Persons (PEPs) identification and enhanced scrutiny
• Higher-risk jurisdiction monitoring and assessment
• Correspondent banking due diligence
• Money remittance service provider oversight and beneficial owner verification
• Enhanced monitoring of cash-intensive businesses

Record-Keeping:

• Minimum 5-year record retention for customer identification documents
• Transaction record retention requirements
• Wire transfer message documentation
• Audit trail maintenance for compliance activities

Regulatory Powers

NBRM Enforcement Authority:

The NBRM possesses comprehensive enforcement authority to ensure compliance with banking regulations, prudential requirements, and AML/CFT standards.

Enforcement Tools:

• Issuance of compliance orders and cease-and-desist directives
• Financial penalties and administrative fines
• Restrictions on specific banking activities or service offerings
• Suspension of dividend or capital distribution payments
• Mandatory corrective action plans with supervisory monitoring
• License suspension for serious or persistent violations
• License revocation and institution closure in cases of insolvency or fundamental compliance failures

Administrative Proceedings:

• Due process protections with right to respond to alleged violations
• Opportunity for remedial action within specified timeframes
• Administrative review and appeal mechanisms
• Graduated enforcement approach based on violation severity and history

Coordination:

Enforcement cooperation with:

• Financial Intelligence Unit (FIU) on money laundering and terrorism financing
• Other regulatory authorities on financial stability and consumer protection issues
• International supervisory authorities through information-sharing mechanisms

Regulatory Role and Function

Legal Foundation

Constitutional Framework:

The legal status and authority of the NBRM is established through the Constitution of the Republic of North Macedonia and primary banking legislation.

Primary Legislation:

• Law on the National Bank of the Republic of North Macedonia: Establishes the central bank's status, objectives, governance structure, and operational authority
• Law on Banking: Governs the activities of credit institutions and establishes prudential regulatory framework
• Law on Payment Services and Payment Systems (2022): Transposed EU payment directives and establishes payment system regulation

Subordinate Regulations:

• NBRM regulations on monetary policy and implementation instruments
• Regulations on payment systems and payment services
• Banking supervision and prudential requirements
• Foreign exchange regulations and controls
• AML/CFT compliance standards
• Regulations on financial market operations and government securities

European Harmonization:

The Law on Payment Services and Payment Systems transposes several EU directives:

• PSD2 (Revised Payment Services Directive)
• EMD2 (Revised E-Money Directive)
• PAD (Payment Accounts Directive)
• SFD (Settlement Finality Directive)
• IFR (Interchange Fee Regulation)
• SEPA regulation provisions

Licensing and Authorization Relevance

The National Bank of the Republic of North Macedonia (NBRM) is a key licensing authority in North Macedonia's financial system:

The licensing process typically involves assessment of capital adequacy, fitness and propriety of management, business plan viability, AML/CFT compliance frameworks, and IT systems readiness.

Payments and Money Movement Relevance

Primary Objective:

The primary objective of the NBRM is to maintain price stability, supporting sustainable economic development and full employment as secondary objectives.

Monetary Policy Framework:

The National Bank establishes inflation targets and employs forward-looking monetary policy to achieve medium-term price stability. The framework incorporates inflation expectations anchoring and counter-cyclical policy adjustments.

Policy Instruments:

• Policy Rate: Base interest rate established through monetary policy decisions
• Open Market Operations (OMOs): Management of system liquidity through repo operations and securities trading
• Standing Facilities: Overnight lending and deposit facilities providing automatic access to liquidity
• Reserve Requirements: Minimum reserve requirements on bank deposits

Inflation Targeting:

The NBRM establishes explicit inflation targets, guiding monetary policy decisions and anchoring market expectations. The framework incorporates medium-term target ranges accounting for price level stability.

Liquidity Management:

The central bank manages banking system liquidity to ensure effective monetary policy transmission while maintaining payment system efficiency.

Payment System Oversight:

The Law on the National Bank empowers the NBRM to oversee the safety, soundness, and efficiency of payment, settlement, and clearing systems. The central bank establishes and enforces standards for system operation and participant conduct.

System Infrastructure:

• Real-Time Gross Settlement (RTGS): High-value payment clearing and settlement
• Automated Clearing House (ACH): Lower-value retail payment processing
• Central Securities Depository: Securities settlement and custody functions
• Payment service provider networks: Supervision of non-bank payment operators

Payment Services Regulation:

The NBRM regulates the provision of payment services through the Law on Payment Services and Payment Systems (effective January 1, 2023). Licensed providers include:

• Banks and saving houses
• Branches of foreign banks
• Payment institutions
• Electronic money institutions
• Financial companies with payment service authorization

Licensing for Payment Services:

• Payment institutions: Must hold NBRM license to provide payment services
• Electronic money institutions: Must obtain authorization to issue electronic money
• Minimum capital and governance requirements apply
• Fit-and-proper assessments of operators required

Regulatory Standards:

• SEPA (Single Euro Payments Area) standards adoption where applicable
• Compliance with Committee on Payments and Market Infrastructures (CPMI) principles
• Interoperability requirements for payment service networks
• Consumer protection and dispute resolution standards
• Cybersecurity and operational resilience requirements

Transition from Previous Framework:

The new 2022 law replaced:

• Law on Payment Operations (2007): Regulated payment operations carriers and system supervision
• Law on Providing Fast Money Transfer Services (2003): Covered money remittance services

Both prior laws ceased application January 1, 2023 (except selected provisions)

Currency and Exchange Rate:

The Macedonian denar (MKD) is the official currency of North Macedonia. The NBRM establishes foreign exchange policy and manages exchange rate arrangements.

Foreign Exchange Regulation:

• Licensing and supervision of foreign exchange dealers and brokers
• Establishment of prudential limits on foreign exchange exposure
• Monitoring of banks' foreign currency positions and mismatches
• Regulation of forward contracts and derivatives for hedging purposes
• Cross-border payment flow oversight

Reserve Management:

The NBRM maintains adequate foreign exchange reserves to:

• Support exchange rate stability and monetary policy objectives
• Cover external liabilities and payment obligations
• Provide liquidity in external shocks
• Maintain confidence in the monetary system

Foreign Exchange Transactions:

Banks and authorized financial institutions must comply with NBRM regulations on:

• Exposure limits and concentration requirements
• Position reporting and monitoring
• Hedging practices and derivative transactions
• Documentation and record-keeping requirements

Payment Systems Governed or Overseen

The NBRM operates and/or oversees the national payment and settlement infrastructure of North Macedonia. Specific systems include:

[Further detail on specific system names requires verification from official sources]

Relationship to Other Regulators

European Integration:

North Macedonia actively pursues European Union membership and works toward regulatory harmonization with EU standards. The central bank coordinates closely with European institutions on banking and payment system regulation.

Twinning Projects:

The NBRM participates in comprehensive twinning projects with the European System of Central Banks (ESCB) aimed at:

• Harmonizing regulatory rules and policies with ESCB standards
• Aligning operations with international best practices
• Capacity building in payment services and systems
• Banking regulation and supervision expertise development
• Financial accounting and statistics harmonization
• Enhanced policy analysis and research capabilities

Regional Cooperation:

• Participation in Committee of Central Banks of the Balkans
• Cooperation with neighboring central banks through information sharing
• Participation in regional financial stability forums
• Exchange of supervisory expertise and best practices

International Institutions:

• International Monetary Fund (IMF) cooperation on financial assessments
• World Bank engagement on financial sector development
• International Bank for Settlements (BIS) participation
• Central bank cooperation networks for technical assistance

Bilateral Agreements:

The NBRM maintains cooperation agreements with:

• European Central Bank (ECB)
• Other EU central banks
• Central banks in neighboring countries
• International supervisory and regulatory organizations

Geography and Jurisdiction Notes

Important Departments and Divisions

Key Public Resources

Central Bank Headquarters:

National Bank of the Republic of North Macedonia

Dame Gruev Street 1

1000 Skopje

North Macedonia

Official Website:

www.nbrm.mk

Governing Structure:

• National Bank Council: Nine members (Governor, three Vice-Governors, five non-executive members)
• Governor: Elected by the National Bank Council from among executive members

Key Departments:

• Monetary Policy and Economics
• Banking Supervision
• Payment Systems and Operations
• Financial Stability
• Compliance and AML/CFT

Notes on Naming and Language