Capital market development


/ Governor Gërguri speech Regional Conference on the Capital Market: "Regional opportunities for capital growth of Kosovo enterprises", November 15, 2012, Emerald Hotel, Pristina /

Dear Minister Hamza,
Dear Mrs. Shauket, USAID Mission Director,
Dear Mrs. Sulenta, USAID_ Partnership for Financial Stability
Dear Mrs. Schwartz, U.S. Treasury Department Advisor
Dear Mr. Wright, Chairman of the Board of the Association of Banks in Kosovo
Dear representatives of the capital market / scholarships from Croatia, Macedonia, Albania
Ladies and Gentlemen,


I am delighted to welcome this valuable audience participating in this very important conference regarding the topic as well as the diversity in institutional and geographical representation. At the very beginning let me thank USAID which through the Stability Partnership Program continues to gather us for sharing our experiences and challenges towards sustainable economic development.

With minor exceptions, our region in general has overcome, without major troubles, the recent global financial crisis and the current crisis in the Eurozone. However, despite the fact that our countries have managed to develop sustainable financial sectors in economic development function, such rely in one funding source only, cannot contribute enough, for us to move faster towards individual as well as regional convergence with the developed economies. 

Moreover, the concentration of one-dimensional source of financial support makes our economies more sensitive to possible shocks. Consequently, the development of capital market besides providing additional alternative opportunities for development represents an excellent opportunity to diversify our economies exposure to potential crises. Simply, there is now a general agreement that the development of the capital market is a mechanism with a double benefit - as promoter and safeguard for macroeconomic and financial stability of the country. 

Given this, I believe it is a general agreement that the development of the capital market requires the fulfillment of certain important, but not easy to achieve, preconditions. In this context, it should be reemphasized the importance of macroeconomic stability of the country for capital market development. We also need to emphasize the importance of strengthening financial institutions (banks, insurance, pensions, etc.) - very important institutions for mobilizing the savings of individuals and households and putting them at the disposal of capital markets.   Also, financial reporting and transparency, respectively the upgrade towards the best standards of accounting and auditing together with the upgrade in the execution of contracts remain important areas for creating foundations of sound capital market. Equally important is the adequate protection of domestic and foreign investors as well as engaging in financial education with a focus on the role and importance of the capital market, etc. Given the prerequisites mentioned above with an increased interagency coordination and commitment we can accelerate our coming to the stage, where even in our countries, the capital market will be a common business. In this regard, political institutions willingness is crucial.    

Regarding Kosovo, please allow me to highlight our progress in ensuring macroeconomic stability characterized by financial and fiscal stability. More specifically, parallel to the lowest fiscal deficit rate and external public debt to GDP ratio in the region and beyond, we continue to generate the highest rate of GDP growth in the region. At the same time, Kosovo still continues to improve in the field of the business environment, which can be seen from recent World Bank report on "Doing Business".
In this context, the Central Bank of the Republic of Kosovo is enhancing financial legislation, corporate governance and information disclosure, always bearing in mind that for an effective and efficient capital market, sound actors are required. Capital market development is fully consistent with the main CBK objectives, because a sound capital market contributes to the further strengthening of CBK role in safeguarding and maintaining financial stability as well as efficient allocation of resources in an open and competitive market conditions. Moreover, the capital market would contribute to profiling new financial sector of a one-segment market (based solely on bank loans) in a multi-segment market where money market and different instruments of the capital market complement bank financing.
If we refer to the actors, at national but also at regional level, businesses still have homework to do, namely to reflect their willingness to conform to the basic rules of the capital market that is, inter alia, a readiness to divide the management from the property- i.e. migration from a family business to a business organized into joint-stock companies; public responsibility, accountability and transparency as the right way to multidimensional financing. Of course, it should be also mentioned the importance of getting fiscal incentives and other incentives that will contribute to the creation of a new business profile required by a sound capital market that by bringing together capital users with capital providers, in essence, is simply a facilitator of capital creation.
However, despite mentioned progress, it should be noted that under the conditions of today’s globalization, in addition to globally thinking, we should also act regionally and globally respectively. Our economies provide opportunities and considerable economic potential, but given that globalization challenges in particular small markets with limited liquidity and products, it is needed measuring of stability and real competitiveness of our local markets consolidating more and more at regional level. Past experiences from different regions indicate that the prospect stands in creating a strategy for cooperation between the countries of the region, namely in the area of capital market and if feasible in the creation of regional stock exchange as well. Of course to move quickly in this direction, it is needed identification and bridging the diversity of the legal and regulatory nature, clearing and settlement, accounting, trading currency,  cultural and linguistic, etc.. I am deeply convinced that this seminar will significantly contribute to our movement in reducing these differences.

Thank you!