3rd November 2020, Skopje – The financial system has successfully responded to the initial blow of the COVID-19 crisis, being ready to cope with the upcoming challenges. Financial regulators are closely monitoring the developments and the evolution of COVID-19 crisis, being prepared to adjust their policies, thereby guaranteeing financial stability.
This is one of the conclusions from yesterday’s session of the Financial Stability Committee, wherein, the assessments and views for each of the financial system segments, were presented. The session was chaired by the Governor of the National Bank, Anita Angelovska- Vezoska, being also attended by the Minister of Finance, Fatmir Besimi, the President of the Securities and Exchange Commission, Nora Aliti, the President of the Council of Experts of the Agency for Supervision of Fully-Funded Pension Insurance, Maksud Ali and the President of the Council of Experts of the Insurance Supervision Agency, Krste Sajnoski.
Minister of Finance, Fatmir Besimu stressed that Ministry of Finance closely monitored the financial and leasing companies segment, being under its competence as a regulator, although their share of less than 2% in the total assets of the financial system, do not pose any threat against its stability. He pointed out that despite the COVID-19 crisis, this segment of the financial system achieved positive financial performance.
Besimi pointed out that preserving the stability of the financial sector in times of COVID-19 crisis was of special significance, including the real sector as well, given that finances are the lifeblood of the economy, i.e. the driving force of the economic activities.
In line with the expectations of the Ministry of Finance, and on the basis of the developments on the market, the activity of financial companies will be intensified in the upcoming period.
By mentioning the developments in the banking system, Governor Angelovska-Bezoska stressed that according to the latest indicators, at the end of the third quarter, the performance of the system was better than it was before the start of the COVID-19 crisis.
“The capacity of system for coping with shocks also increased, with substantial capital and liquidity buffers, whereby the solid efficiency ratios were also significant therefor. Moreover, at the end of September, the level of non-performing loans was at historically the lowest level, accounting for 3.4%.” – Angelovska -Bezoska pointed out.
What was also pointed out at the session was that given the features of COVID-19 crisis the economy is going through, what is important is that there were no significant changes in the euroization rate of the banking system – it was at almost the same level as it was a year ago, whereby foreign currency deposits accounted for around 42% of the total deposits, which speaks in favour thereof according to the observations of the economic entities.
The President of the SEC, Nora Aliti, by referring to the activities undertaken by the SEC on a regular basis, pointed out that the foundations which the securities market relies upon, were estimated as sound, however, the changeable and unpredictable environment requires further close monitoring of the trends and the potential risks in the light of preserving the stability and the security of the capital market in the coming period.
“On a nine-month basis, the total amount of turnover on the domestic market is higher by 24% compared to the same period last year. MBI10 index, upon the evident price fluctuations and the value decline in the first quarter, registered a slight oscillation in the remaining part of the year, registering slight decline of 3.52% on annual basis, i.e. the lowest drop compared to the major regional stock market indices.” – Aliti pointed out.
President of the Council of Experts of Agency for Supervision of Fully-Funded Pension Insurance, Maksud Ali, said that the fully-funded pension insurance remains to be stable and transparent with identified risks, analyzed and controlled on regular basis, being under the regulations, with special attention being put on investing in the Pension Funds’ assets.
“However, the uncertainty in the fourth quarter this year, is still quite high. The second wave of the virus can cause new fluctuations on the financial markets, thus also affecting the value of the Pension Funds’ assets. The development of technology, on the other hand, requires rapid adjustment of the regulations to the needs of the members of the Pension Funds, as well as the supervision of the pension companies, in order to both minimize the risk of the virus spread and protect the public health, while ensuring business continuity and smooth pension insurance-related operations”, Ali pointed out.
President of the Council of Experts of the Insurance Supervision Agency, Krste Sajnoski, underlined that the financial status of the insurance companies was improved in the first half of the year.
“Conservative policies and regulations on valuation of technical provisions and investments of assets covering the technical provisions, as well as the high quality of instruments included in the calculation of the capital of insurance companies, are a good basis and guarantee for maintaining solvency in the operations of companies” Sajnoski pointed out.
What was also pointed out at the session, among other things, was that in the past period there was disinformation and false claims about certain financial institutions, not being substantiated by facts. Taking into account the possible consequences of such phenomena on the financial system, what was pointed out was the need for joint efforts by the financial regulators so as to prevent such a phenomenon to lead to risks, which would be an additional contribution to the further strengthening of the financial stability. Thereby, it was pointed out that what also mattered was for the economic entities to monitor the reference and official sources of information about the financial institutions and all segments of the financial system.
At the end of the Committee’s session, the decisiveness of the financial regulators for further coordinated monitoring of the developments in all segments of the financial system, was emphasized.