The Monetary policy in the Republic of North Macedonia and Republic of Albania during 2020

Abstract

Globally, the COVID-19 pandemic crisis is considered as one of the worst global recessions in history, caused by non-economic factors such as the coronavirus pandemic. The pandemic crisis has increased the financial stability and vulnerability across different markets and sectors. These changes required the central banks, governments, and other authorities to take a variety of policy assistance steps to help limit immediate financial stability threats. The goal of this study is to examine how the monetary policies of the Republic of North Macedonia and Republic of Albania, as one of the two key macroeconomic policies, have reacted in response to COVID 19 for the year 2020. This study looks at how the central banks of both countries have altered conventional and unconventional monetary policy tools to combat the pandemic. The analysis is based on the data published by the monetary officials in both countries. The results show that interbank interest rates in the Republic of North Macedonia and Republic of Albania were reduced from 2.00% to 1.50% and from 1.00% to 0.50%, respectively, while overnight loan interest rates were reduced from 2.50% to 2.00% and from 1.90% to 0.90%, respectively. An overview of the unconventional measures is also presented.

Assessing financial stability in Southeast Europe (SEE): An econometric perspective

“…Cocris et al, (2013) find that changes in the policy rate have a significant effect on the stability of the banking system in Bulgaria (Cocriş & Nucu, 2013). On the other hand, Hadzimustafa (2021) shows that in Albania, a tight monetary policy stance can be effective in reducing systemic risks (Hadzimustafa & Abazi-Alili, 2021). However, Skenderi at al., suggest that in Kosovo, the impact of monetary policy on financial stability may be limited due to the small size of the financial sector and limited financial deepening (Skenderi et al, 2015).…”