The European Commission Report on Kosovo acknowledges the reforms undertaken by the CBK


The Central Bank of the Republic of Kosovo has welcomed the conclusions drawn in the European Commission (EC) report on Kosovo for 2019, which recognizes the commitment and reforms undertaken in the financial sector and also provides recommendations for further advancements.

The report highlights the progress that the CBK has made in the area of capital requirements and risk management of banks following the entry into force of the capital adequacy regulations and the leverage ration, which are in line with the Basel III framework. The capital adequacy ratio is considered to be stable and well above the required regulatory minimum of 12%. On the other hand, the report emphasizes the need to establish an independent recovery and resolution authority, as well as amendments to the Law on Banks to assign this function to the Central Bank and to ensure the functional independence of this authority.

The EC report praises the measures taken by the CBK to strengthen the consumer lending price transparency. As of 2019, all credit institutions have to use the standard European consumer credit information form for loan applications, in order to ensure the adequate disclosure of credit information.

The report devotes a special space to developments related to the impact of the pandemic on Kosovo's economy, highlighting the measures taken by the CBK to help borrowers overcome the financial difficulties that have arisen as a result of the crisis. In this case, the report describes the regulatory and supervisory measures of the CBK, which have enabled the postponement of loan instalment payments to borrowers,  and have facilitated credit restructuring.

In the field of insurance, the report states that the CBK has continued to implement the measures of Solvency I, amending the Regulation on the calculation of the minimum solvency threshold, capital adequacy and guarantee fund for non-life insurers, as well as adopted the Regulation on liquidation of insurers. However, the report also emphasizes the need to develop a roadmap for the implementation of Solvency II measures. Another area addressed in the report concerns the amendment of the Regulation on the management of commissions and operational expenses of non-life insurers, reducing the limit on accounting for operational costs from 35% to 24% of total costs. The report highlights that the Central Bank did not take any immediate measure on price liberalisation of the insurance market. However, the CBK in September this year informed the public about joint preparations with the Kosovo Competition Authority to change the risk-based pricing model.

The failure to address the issue of uninsured and unregistered vehicles, as well as the costs incurred by the insurance sector, continue to be highlighted as issues of concern in this report. Also, the lack of coverage of Kosovo with the green card, according to the report, continues to represent a financial burden for passengers (except those from countries with which Kosovo has bilateral vehicle insurance agreements).

The Central Bank of the Republic of Kosovo remains committed to continue advancing the reforms in the financial system in order to strengthen and further develop this sector, as well as meet the necessary criteria for advancement in the field of European integration.