North Macedonia had some years of incoherent policy at first but then settled on an arrangement under which, although no formal parity was specified, the exchange rate was de facto pegged to the DM/euro and monetary policy was focused successfully on its stability.
| Years | Targets and attainment | Classification |
| 1992-93 | independent late 1991, out of breakup of Yugoslavia, first as Former Yugoslav Republic of Macedonia, from 2019 as North Macedonia; April 1992 new Macedonian denar, initially pegged to DM, devaluation October 1992 and switch to basket peg, rising parallel market premium, further devaluation December 1992, peg abandoned mid-1993; new central bank uses selective credit refinancing facilities, also reserve and liquidity requirements, but accommodates SOEs’ credit demands; currency reform May 1993; old, financially unsound, commercial banks controlled by client SOEs, new banks set up from 1993 | unstructured discretion UD |
| 1994-97 | early 1994 fiscal and monetary stabilisation programme focused on reserve money and inflation, with passive rediscounting of commercial bank credits to SOEs replaced by other mainly direct monetary instruments; efforts to accelerate structural reforms; 1995-6 exchange rate stabilised, restructuring of major bank; 1996 interbank money market set up, volume remains limited; failure of large savings house 1997, moves to clean up financial sector more widely; mid-1997 devaluation vs DM; | loosely structured discretion LSD |
| 1998-2017 | primary objective is price stability, nominal anchor is exchange rate vs DM (later euro) but no formal parity specified, reserve money is intermediate target, while active instruments are bank-by-bank credit ceilings and central bank daily short-term credit auctions; payments system in need of reform; first half 1999 Kosovo crisis effects limited, quick recovery; credit auctions give way to weekly auctions of central bank bills at various maturities, credit ceilings become supervisory rather than monetary devices, by April 2000 monetary instruments are mainly indirect; 2001 uprising by ethnic Albanians, ending with peace agreement conferring more power and recognition to Albanian minority; payments system reform 2001; 2002-3 more volatility in exchange rate but stability restored at preceding level; 2003 reorganisation of forex market; central bank bill auctions move from fixed price to fixed quantity; 2004 application to join EU, blocked by Greece over dispute about name; as of 2006 relatively low monetisation and financial intermediation, considerable euroisation; by 2006 some improvement in government securities market; effects of GFC 2008 largely contained; as of 2009 main monetary instrument is 28-day central bank bill, though transmission is weak and unclear, but reserve requirements and macro- and micro-prudential policies remain important; policy rate but no corridor; imperfect capital mobility (due to limited integration with global financial system) allows for limited monetary autonomy; some gradual de-euroisation; 2012 adjustments to bill auctions, new deposit facility and new weekly facility for banks to obtain liquidity; 2015-16 domestic political tensions, adverse effects from Greek crisis, strong action taken to avoid depreciation; 2017 political deadlock after elections obstructs policymaking, but mid-year new government; statistics mostly acceptable by end of period | loose exchange rate target LERT |
Selected IMF references: RED 1993 pp16-22, 32-3, 81; SR 1993 pp2-3, 4-6; RED 1995 pp1, 11-13, 27-8; SR 1997 pp4, 5, 17-19; RED 1998 pp37-8, 39-44, 78-80; RED 2000 p17; SR 2000 p21; SR 2002 pp12, 22-3; SR 2003 pp14, 16; SI 2006 pp54-9; SR 2006 p27; SI 2009 pp9, 12-14; SR 2009 pp4-5, 11, 20; SR 2011 pp19-20; SI 2012 pp3-5, 15-16, 22-3, 25-9; SR 2012 pp9, 15-16; SR 2014 p19; SR 2015 pp8, 12-13; SR 2016 pp15-16; SR 2017 pp4; SRIA 2017 pp10-11.
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Monetary Policy Frameworks 