Central Bank of Kosovo

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. In the early 1990s at the start of the Yugoslav Wars, the system was recentralized and the NBK became a mere branch of the NBJ, losing its autonomous legal identity. Its building was heavily damaged by bombing during the Kosovo War in 1999. The Banking and Payments Authority of Kosovo (BPK) was established in November 1999 by the Special Representative of the Secretary-General for Kosovo in the immediate aftermath of the Kosovo War. In 2006, the Special Representative enacted a new Regulation transforming the BPK into the Central Banking Authority of Kosovo (AQBK). The Central Bank of the Republic of Kosovo was founded in June 2008, the same year Kosovo declared its independence from Serbia, under Law No. 03/L-074 enacted by the Assembly of the Republic of Kosovo. ==Functions and objectives==

The following are the objectives of the Central Bank of Kosovo, as listed in "Objectives," Article 7, Chapter III of the Law No. 03/L-209 : • The primary objective of the Central Bank shall be to foster and to maintain a stable financial system, including a safe, sound and efficient payment system. • An additional objective of the Central Bank, which is subordinated to the primary objective of the Central Bank, is to contribute to achieving and maintaining domestic price stability. • Without prejudice to attainment of these two objectives, the Central Bank shall support the general economic policies of the Government. • The Central Bank shall act in accordance with the principle of an open market economy with free competition, favoring an efficient allocation of resources. ==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. The Central Bank of the Republic of Kosovo reports only to the Assembly of the Republic of Kosovo. • 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) • Credit Bank of Prishtina 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. ==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. 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. 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." 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: • Legal Framework • Large-value and time-critical payments • Retail payment systems • Government transactions • Securities depository, clearance and settlement • Money market • International remittances • Oversight • Cooperation (National Payments Council) Real time gross settlement system (RTGS) remains the most important singular project which is being developed under the NPS. ==Strategic plan (2010–2015)==

The Central Bank has set five strategic goals for five years of its operations, with the purpose of aligning the Bank's duties towards the citizens and the economy in general. These goals are: • To promote and foster financial stability in the Republic of Kosovo - The Central bank analyses the safety of the financial system, eliminates the potential risks and by creating analytical indicators, and also promotes a proper environment for operations • To support general economic policies to achieve sustainable economic growth in the Republic of Kosovo - The Central Bank encourages economic growth through better economic policy making, by conducting economic research and informing the public. • To ensure development of contemporary interbank systems and to provide effective banking services to customers - By using the Electronic Interbank Clearing System (EICS), the Central Bank functions as a hybrid system that facilitates the channeling of various payment instruments among banks. • To promote sound development of the financial sector in the Republic of Kosovo - The Central Bank of Kosovo aims to develop the financial sector by investing on the safeguard of the private market enterprises and on providing the government with their own experience. CBD tends to achieve this by framing a new legal framework for new financial products and accrediting new financial institutions. • To contribute to the processes for integration into European Union and other international institutions - This strategy includes investing on promoting the Republic of Kosovo and the Central Bank of Kosovo at an international level. This to be achieved by maintaining good relations with other counter-parties, applying international standards and attending seminars and event organized. ==Issuance of bonds==

After signing a regulation for primary and secondary government bonds with the Ministry of Finance in December 2011, the Central Bank of Kosovo issued bonds for the first time on January 17, 2012. During its first auction, the CBK was able to collect a sum of €10 million worth of monetary assets. Another €64 million could be raised during the rest of 2012, bringing the total value of bonds issued during 2012 to €74 million, just as was declared by an adviser to the Minister of Finance on January 9, 2012. It is expected that during the course of 2013, the CBK will be able to raise a sum equal to €80 million. ==Board and governors of the CBK==

Current Governing Board of the Central Bank of Kosovo • Bashkim Nurboja - Chairman of Governing Board • Nora Latifi - Jashari - Member of Governing Board • Nexhat Kryeziu - Member of Governing Board List of governors of the Central Bank of Kosovo • • • • • ==Controversies==

On 23 July 2010, Hashim Rexhepi, then the governor of the Central Bank of the Republic of Kosovo, was arrested based on grounds of "corruption and money laundering". According to EU's Rule of Law Mission EULEX, "the probe concerned suspected bribes, tax evasion, influence-peddling and money laundering". The accusations and imprisonment, however, cost Hashim Rexhepi to lose his job as governor of Kosovo's central bank. ==See also==