Macedonia links up with EU payment infrastructure

Macedonian banks that have accounts with the Macedonian Interbank Payments System (Mips) will soon be able to make euro payments through Europe’s Target2 payments infrastructure.

The small European nation, which is not yet part of the European Union, began working on connecting Mips with Target2 at the start of 2017.

“Mips was upgraded to making euro payments and connecting to TARGET2 through the Bank of Italy,” the National Bank of the Republic of Macedonia (NBRM) announced in a statement released on March 28.

“Our ultimate goal is to make cross-border payments in euros easier and cheaper, which will benefit the overall economy,” the statement says, stressing the new development allows Macedonia to integrate at “a higher level” with European institutions.

Macedonian payment infrastructure underwent significant reform back in 2001. The latest development marks the second overhaul, with further changes in the realm of mobile payments expected in the near future, Igor Velickovski, manager of the payments system department at the NBRM told Central Banking.

Speaking to Central Banking on the sidelines of its National Asset and Liabilities Management Conference Europe, Velickovski talked about the challenges and developments impacting the Macedonian payments system.

“The main challenge for the national bank is to harmonise the national legislation in the payment area with the EU acquis,” he said. The acquis governs the rights and obligations of EU members.

“In particular, it is a challenge we are not yet part of the EU, but have to provide indirect access to the largest [European] payment infrastructure for domestic service providers.”

In a report published in March 2013, Macedonia’s central bank took stock of the issues facing its payment structure and set out a strategy for the next four years.

The report noted “gradual implementation of technical standards” for payment systems, as set out by EU legislation, would reduce operational risk and “provide greater efficiency” when joining Target2 and the Single Euro Payments Area (Sepa).

Velickovski also stressed there was a wider challenge for central banks to maintain confidence in their payment systems, during a time when innovation has the potential to threaten stability.

“Technological evolutions have created the expectation payments should be instantaneous and without border obstructions. At the same time, users expect payments should be secure and money in their accounts should be kept safe,” the director said.

“The challenge for central banks is to maintain confidence in money by providing or enabling safe, fast and secure retail payments.”