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General information on the twinning project

In 2019, Germany and Croatia were mandated to implement the twinning project "Strengthening of the institutional capacity of the National Bank of the Republic of North Macedonia (NBRNM) in the process of its accession to the European System of Central Banks". The overarching objective of the twinning project is to support NBRNM in further harmonising rules, regulations, policies and operations with existing standards of the European System of Central Banks (ESCB) and with international best practices. To achieve this, the project plan agreed upon between the contracting parties focuses on the following four components: payment services and systems, banking regulation and supervision, financial accounting statistics and expertise in policy analysis. In the implementation of the specific project activities, experts from the central banks of Belgium, Lithuania, the Netherlands, Portugal and Romania are supporting the central banks of Croatia and Germany.

First assignments within the banking regulation and supervision component

The twinning project, which is receiving EU funding of €600,000 and will run until the end of 2020, was launched with a kick-off meeting in the North Macedonian capital of Skopje on 30 October 2019. Shortly after the official launch, numerous project assignments began within the aforementioned project components. The starting point for the banking regulation and supervision component was a study visit by NBRNM employees at the central office of the Deutsche Bundesbank in November 2019. During their one-week stay, eight employees of the NBRNM were given an insight into the supervisory assessment of the ILAAP within the SREP in the SSM. Besides fruitful insights into the evaluation of banks’ ILAAP, Bundesbank representatives gave practice-based lectures on, among other things, the ICAAP requirements within the SSM or the performance of on-site inspections in Germany. Last but not least, the study visit was rounded off by presentations on the banking sector and banking supervision in North Macedonia held by NBRNM representatives.

Based on these first impressions, three employees from De Nederlandsche Bank (DNB) and the Deutsche Bundesbank travelled to Skopje in February 2020. The “fact-finding mission” mainly aimed at analysing the current consideration of liquidity aspects within the SREP. Based on this analysis, the potential design of the future methodology and processes for assessing the ILAAP within the SREP was discussed. Establishing an appropriate methodology and associated processes is one of the three key objectives within the banking regulation and supervision component.

Outlook

The expert team aim to complete the outstanding steps in the course of a further stay in Skopje later this year. During this stay, the expert team will, together with NBRNM colleagues and based on a joint evaluation of the first ILAAP reports submitted by North Macedonian banks to the NBRNM, finalise the overall methodology and procedures for evaluating the ILAAP as part of the SREP.

Text: Nick Wermuth