As the operator of NBO, Norges Bank is also working on measures that will strengthen the settlement system centrally. 5  Committee on Payments and Market Infrastructures (CPMI) – previously the Committee on Payment and Settlement Systems (CPSS) – and International Organization of Securities Commissions (IOSCO). 6  The financial infrastructure comprises the payment system and securities settlement system, including central counterparty systems. 7  The following systems were evaluated: Clearing and settlement systems for payments, the securities settlement system, the VPS registry function and the central counterparty Oslo Clearing, the latter two in collaboration with Finanstilsynet. The evaluation was presented in the Norges Bank Financial Infrastructure Report 2014. 4  BIS central bankers’ speeches  Outsourcing Today’s financial infrastructure is based on advanced technical solutions. This places considerable demands on system developers and operators. This expertise is costly and may be difficult to retain. Owners have largely outsourced technical operations. This provides greater flexibility. At the same time, outsourcing can make it more challenging to manage operational risk. The fixed costs associated with operation and development can be high. This allows operators to exploit economies of scale. A possible result of outsourcing is that several systems use the same service provider. This may reduce costs. On the other hand, such a concentration may weaken competition, while risk is concentrated in a single provider. Any failure in the service provider may then impact large parts of the financial infrastructure. The systems are vulnerable to technical failure and to external attacks.

Speaking domestically, as the mega-regulator of the financial sector, how do you view the strength of the banking segment in terms of contributing to domestic growth? Following the crisis the Macedonian banking sector proved to be quite resilient. No banks failed and all were well capitalized. Our prudential regulation has always kept banks from entering into risky investments as we have a conservative banking system. As a result, we were not exposed to some exotic instruments from abroad before 2008 which is why they did not suffer directly. Indirectly, yes, through reduced economic activity which created some problems with companies in the real sector where they could not repay their loans which in turn raised the Non-Performing Loan (NPL) ratio to around 12%. But again, comparing regionally from Slovenia to Greece it is probably the lowest and more importantly, fully covered with provisions. Liquidity is very high at 30%. So after stabilization the goal is to promote lending activities once more. A second channel of exposure was through the fact that 90% of Macedonian banks are foreign owned and parent banks were primarily oriented to handling problems in their home country. Sometimes they make decisions at a group level without paying specific attention to their Macedonian operations, which affects our banks negatively, depicted by years with no growth. I do have to point out, however, that Macedonian banks do not rely on funds from their parent banks; our Loan-to-Deposit (LTD) ratio is 90%.