Skopje, 1 October 2024 (MIA) – The pillar for implementing policies to address global economic shocks are the independence and credibility of central banks, which in the South European region, in just one year, have contributed to reducing the highest inflation in the past five decades to single-digit levels, as noted at Tenth International Conference on Tuesday.

The National Bank, in cooperation with the Reinventing Bretton Woods Committee (RBWC), is holding today the jubilee, Tenth International Conference.

Delivering opening remarks at the conference, IMF European Director, Alfred Kammer, believed that the central bank independence may be the foundation of modern central banking, but the transparency and accountability are what balances the central bank independence with the principles of democracy.

“North Macedonia is an impressive example. The establishment of an independent central bank in 1992 was crucial for reducing hyperinflation from the early 1990s. The National Bank ranks very high in the IMF’s new Central Bank Independence Index,” Kammer noted.

According to the Executive Director of the RBWC, Marc Uzan, the trust that central banks enjoy worldwide for many years could be lost if society began to doubt their commitment to price stability.

“Some generations experienced for the first time the risk of transitioning the economy to a high-inflation regime. Therefore, in order to restore price stability, it was necessary and appropriate for central banks to decisively tighten their policies through higher interest rates,” Uzan noted.

National Bank Governor Anita Angelovska – Bezhoska, citing the National Bank as an example of an independent central bank, noted that the provisions for independence are incorporated in the Constitution and the Law on the National Bank, and these have been assessed as having a high level of compliance with EU law.

“Deglobalization, an aging population and climate threats could reduce production capacities, making supply less elastic and thereby creating ‘a world more inclined toward inflation.’ On the other hand, rapid advancement in technology, such as artificial intelligence, can not only mitigate the impact of the aforementioned negative forces but also enhance growth potential. These transformations require well-established reforms to increase the resilience of economies and reduce medium-term inflationary pressures,” Angelovska-Bezhoska said.

President of the country, Gordana Siljanovska Davkova, also addressed the conference, stating that for banks to perform their crucial role, they must be independent from central authorities and be immune to political pressures.

“We are living in a time of paradoxes, with deep interdependence among nations, economies, people and nature. Social, gender and digital inequalities, both within and between countries, are on the rise. Less developed economies, as the Macedonian economy, which rely on others, disproportionately feel the impact of geopolitical rivalries, military conflicts, and overlapping security and ecological crises. A new model is needed to stabilize shocks in a constantly changing economic environment. Central banks are one of the pillars of stability in these unpredictable times,” Siljanovska Davkova said.

Photo: National Bank of the Republic of North Macedonia