Central Bank of Kosovo — BrandWiki

Central Bank of Kosovo

Overview

native name	Banka Qendrore e Republikës së Kosovës
headquarters	Pristina
coordinates	42.66002°N, 21.15842°W
established	2008
bank of	Kosovo
currency	Euro
currency iso	EUR
reserves	€ 1.177 billion
website	http://www.bqk-kos.org

The Central Bank of Kosovo (, / Centralna banka Republike Kosova, BQK in Albanian and CBK in English) is the central bank of Kosovo. It was established in 2008 as successor of the Banking and Payments Authority of Kosovo (Autoriteti Bankar dhe i Pagesave të Kosovës or BPK, 1999-2006) and Central Banking Authority of Kosovo (Autoriteti Qendror Bankar i Kosovës or AQBK, 2006-2008).

The official currency in Kosovo is the Euro, which was unilaterally adopted by the United Nations administration for Kosovo in 2002; however, Kosovo is not a member of the Eurozone.[1][2][3] The headquarters of the CBK are located in the capital of Kosovo, Pristina.

History

The National Bank of Kosovo (NBK) was originally established in 1972 under the decentralization reforms of that era, as one of eight so-called national banks complementing the National Bank of Yugoslavia (NBJ) within what was referred to as the System of National Banks.[4]

predecessor	Central Banking Authority of Kosovo

succeeded	European Central Bank 1

footnotes	1 Many policies are managed de facto by the ECB/eurosystem, even if the bank is not part of the Eurosystem or the European System of Central Banks.

Legal framework

Law on the Central Bank of the Republic of Kosovo

The Law No. 03/L-074 on the Central Bank of the Republic of Kosovo says that the CBK is a fully authorized legal organization, which has the capacity to "enter into contracts, institute legal proceedings and be subject to such proceedings; and acquire, administer, hold and dispose movable and immovable property." Its capital consists of an authorized budget of €30 million, which is controlled by the state and can be used only for its legal purposes. It is an administrative body which functions independently and under the full autonomy of its leading decision-making entities.[10] The Central Bank of the Republic of Kosovo reports only to the Assembly of the Republic of Kosovo.[9]

Tasks

The main tasks of the Central Bank, as in Article 8 of the same chapter, include maintaining a stable financial system; regulating the financial institutions as specified by law; promoting a safe payment system; maintain an appropriate supply of banknotes and coins within the country; holding and managing the international reserves; collecting and producing statistics; working on achieving price stability; informing the Government about its activities, and acting as an economic and financial adviser/banker for the Government, etc.[10]

Operations

Opening of accounts (Article 9) – The Central Bank of the Republic of Kosovo has the ability to open and maintain cash and securities accounts on its records for national and international financial institutions, as well as governmental and other types of organizations, if required.
Custodial facilities (Article 10) – The Central Bank has the ability to provide custodial facilities to financial institutions and to the general public (for banknotes and coins) as well as other valuable assets (for securities).
Market operations (Article 11) – The Central Bank has the ability to operate in financial markets by trading claims and other marketable instruments, and also conduct credit operations with banks and businesses
Minimum reserves (Article 12) – The Central Bank has the ability to required banks to hold minimum reserves on deposit accounts with the Central Bank
Instruments of credit control (Article 13) – The Central Bank has the ability to decide upon the use of such operational methods of credit control as it sees fit.
Emergency liquidity assistance (Article 14) – The Central Bank has the ability to act as lender of last resort for a licensed bank, by granting financial assistance to banks or for their benefit.[10]

International reserve management

According to Article 15 of the LAW no. 03/L-209 of Central Bank of the Republic of Kosovo, one of the functions of CBK is to conduct transactions in international reserves and manage such reserves consistent with international best practices and subject to its objectives set forth in Article 7 of LAW no. 03/L-209, respecting security, liquidity and yield, in that order of priority.[10]

The Central Bank may hold in its portfolio of international reserves any or all of the following assets:

Gold and other precious metals held by or for the account of the Central Bank, including credit balances representing such gold and other precious metals;
Banknotes and coins denominated in freely convertible currencies held by or for the account of the Central Bank;
Credit balances and interbank deposits that are payable on demand or within a short term denominated in freely convertible currencies and are held in accounts of the Central Bank;
Readily-marketable debt securities denominated in freely convertible currencies issued by, or supported by, the full faith and credit of foreign governments, foreign central banks or international financial institutions;
Claims on international financial institutions resulting from repurchase agreements, sale and buy back transactions and securities lending agreements in the debt securities;
Special Drawing Rights (SDR) held in the account of Kosovo in the

Currency

The currency, or the unit of account, that is used by the Central Bank and the national markets as a medium of exchange is the euro. The currency applied in the general as well as financial market is determined by the Constitutional authority, and the Central Bank single-handedly controls the issuance of banknotes and coins, with no other institution having that right. Furthermore, it manages the exchange of euro banknotes and coins, and the replacement of banknotes or coins that are visibly damaged by more than forty percent (40%) of their surface area. It also validates the process of reproducing banknotes and coins, and "the creation of any objects that by their design imitate any such banknote or coin" requires the approval from the Central Bank officials.[10]

Licensing of banks

The CBK is also responsible for the licensing of banks in Kosovo. The following banks can be found under the current list.[11]

Banka për Biznes
Raiffeisen Bank (Austria)
Economic Bank
ProCredit Bank
TEB SH.A. (Turkey)
NLB Prishtina (Slovenia)
Banka Kombetare Tregtare - Kosove Branch (Albania)
Turkiye Is Bankasi (Turkey)
Komercijalna Banka Ad Beograd - Mitrovica Branch (Serbia)

Statistics and information

The Central Bank can obtain, collect, and manage/publish information related to its activities. It controls the information flow presented to the public by media, and it collaborates with the government in the publication of statistics and other relevant information on activities that concern all the parties involved.[10]

Payment systems

The Banking and Payment Authorities of Kosovo (BPK) planned to establish an Interbank Payment System since November 2000. This idea was initially supported by the International Monetary Fond (IMF) through their professional payment consultants. The recommendations given were based on three development phases, which helped in creating the existing work plan. With the establishment of the Interbank Payments Advisory Committee (IPAC) under the patronage of the Central Bank of Kosovo with the participation of all the other commerce banks, the work continued on framing all the other operational policies on this subject.[12]

Interbank Payment System has gone through three main phases.

First phase

Interbank Clearing System started to function on May 7, 2001. This phase was characterized with the manual exchange of payments, with settlements based on NET balance between debit and credit. In this way, the receiving bank account was credited and the debiting account was debited. At the start, since the number of payment was low, the registrations in account were done manually or on individual bases. This was reached with an agreement between the Interbank Clearing System (ICS) and other participating banks. Another interesting fact regarding the first phase was the activity of the Interbank Payments Advisory Committee (IPAC). This committee was first composed of several banks like ProCredit Bank, NLB Prishtina, Bank for Business. Moreover, Economic Bank joined in June and, towards the end of 2001, Raiffeissen Bank, BKP, and KSB joined also. The committee's obligation was to set the operating rules, the procedure, and standards for Interbank Clearing System. After a year, this committee worked toward Electronic Interbank Clearing System (EICS) which would make possible electronic exchange.[12]

Second phase

The change into manual and semi-manual exchange led to other developments and transformations of the Electronic Interbank Clearing System (EICS). In 2002, the full transition to the electronic system was done. This was achieved in adherence to the necessary IT system and the consultations with KPMG-USAID. The second phase was also categorized with another success, which was the transition to the Standard Numbering System of the Kosovo Banking Accounts. With the assistance of other member banks, this standard reached to be applied to all bank payment accounts that resulted into the increment of the efficiency of the payment system, and more possibilities for new reforms. Another important event was the one on 7 September 2004 when the chief of the American office also the director of USAID acknowledged the Central Bank of Kosovo as the owner of the Electronic Interbank Clearing System present in Kosovo.[13]

Third phase

With the establishment of the EICS system in 2007, the payments delivery system between central and local institutions was highly improved. This eventually progressed into an interconnected framework of all banks in Kosovo. Direct Debit, as the center's newest instrument of payments was first introduced in January 2009, after the approval of the Central Bank's Rule nr XXXI. The release for the general public has been made possible only in November, after the debit system was tested as a separate component in the Electronic Interbank Clearing System (EICS). The system was widely recognized by many banks, including ProCredit Bank, Raiffeissen Bank, NLB Prishtina, Bank for Business, Economic Bank, TEB and National Commercial Bank. The system's efficiency has been increased, which indirectly added to the standards and capacity of the interbank system. "Now every day the participants of the interbank payment system send more safely and efficiently about 15 thousand payments worth over 15 million Euros."[13]

Development strategy

In 2009, the Central Bank of the Republic of Kosovo initiated many discussions on creating a long-term strategy. The discussions were finalized and approved by the Governing Board of the Central Bank on September 11, 2009, which in collaboration with the commercial banks and World Bank has created an Interbank Payment Systems Directorate (IPSD) within its body, which has the aim to ensure that the development strategies for the financial sector in Kosovo will be met.

The 9 pillars in this development strategy for the National Payments System (NPS) are:

Real time gross settlement system (RTGS) remains the most important singular project which is being developed under the NPS.[13]

1) Legal Framework
2) Large-value and time-critical payments
3) Retail payment systems
4) Government transactions
5) Securities depository, clearance and settlement
6) Money market
7) International remittances
8) Oversight

Central Bank of Kosovo

History

Functions and objectives

Legal framework

Law on the Central Bank of the Republic of Kosovo

Tasks

Operations

International reserve management

Currency

Licensing of banks

Statistics and information

Payment systems

First phase

Second phase

Third phase

Development strategy

Strategic plan (2010–2015)

Issuance of bonds

Board and governors of the CBK

Current Governing Board of the Central Bank of Kosovo

List of governors of the Central Bank of Kosovo

Controversies

See also

References