Financial Sector Assessment : FYR Macedonia

The Financial System Assessment (FSA) is based on the work of the joint International Monetary Fund (IMF)-World Bank Financial Sector Assessment Program (FSAP) missions to FYR Macedonia in May and June 2003. Development of the FYR Macedonia's financial system shows the marks of the country's turbulent first decade of independence. The FSAP recommendations aimed at two levels. At the general level, problems of corruption, money laundering, weak implementation and enforcement of laws in the broader economy need to be addressed as preconditions for improving the integrity of the financial system and its role in the economy. Specific recommendations with respect to the operation of the financial system include: (a) strengthening of the regulatory framework for banking and sharpening banking supervision practices; (b) establishing a framework for emergency lending at the NBRM; (c) developing a government securities market as the basis for financial market development; (d) developing supervisory capacity for the insurance market and restructuring the motor vehicle insurance system; and (e) cautious development of the second pension pillar, given the fledging financial markets and its potential impact on the country's fiscal position.