THE DECISION OF MANAGING BANKS’ LIQUIDITY RISK IN MACEDONIA

Abstract

The main purpose of this paper is to analyze Macedonian lawframework for providing liquidity of a bank. At the end of the year 2003,
the National Bank of the Republic of Macedonia (NBRM) has adopt
adequate regulation in order to provide the basic direction and measures
for managing the liquidity of a bank. In the past years, and also today,
the National Bank of the Republic of Macedonia (NBRM) has adopt a
lot of Resolutions that are important for successfully managing liquidity
in Macedonian banks.

These paper consists of 4 parts, that are:
1. What is liquidity risk? ;
2. Managing the liquidity risk;
3. Decision on managing banks’ liquidity risk; and
4. Conclusion.

In the first part: “What is liquidity risk?” we define the term
“liquidity risk” according to the Banking Law of the Republic of
Macedonia and Decision on the risk management - that is established by
the National Bank of the Republic of Macedonia (NBRM). We also
explain the reasons that arises the liquidity risk.
In the second part: “Managing the liquidity risk” we explain the
Methodology for liquidity risk management established by the National
Bank Council, in accordance with the international standards for the
purposes of proper risk management.

In the third part: “Decision on managing banks’ liquidity risk”,
we analyze this Decision that is adopted by the National Bank of the
Republic of Macedonia (NBRM) in order to provide successful
management of this kind of material risk in our banks. This Decision
suffered many changes until now according to the economic situation
and factors that made some changes in the economy, and these changes
are also include in these paper.

In the fourth part: “Conclusion”, we are giving our basic
conclusions that arise from our paper.

Banks are challenged to maintain liquidity in the global financial
system in Macedonia in the maintenance of fiscal and monetary macro
balance. After analyzing the decisions that brought the National Bank of the Republic of Macedonia (NBRM), we can conclude that in Macedonia
there is adequate and solid framework for maintaining the liquidity of
banks. Banks in the forthcoming period, in order to preserve the future
stability and ensure further continuous service, will need to devote more
attention to liquidity management and to make additional efforts to
increase liquidity potential.
These paper also gives the exciting possibilities in the banks in
the Republic of Macedonia for managing liquidity and analyze the future
steps of development of liquidity management. Although the
environment for the implementation of monetary policy in 2011 in
Macedonia is stable, it is still accompanied by uncertainty, which
emphasizes the necessity of continuous assess the risks around the
implementation of monetary targets.