For the emerging world, even more so amidst less developed capital markets, as an alternative source of growth funding. However, during the process of transition, given the still rather weak economic recovery, the reform may have some negative implications for the financial markets, credit activity and growth dynamics. The fact that these reforms were primarily tailored to the specifics of the more advanced economies (AE), where the financial crisis, originally rooted from points to a possibility of asymmetric effects for advanced and emerging economies (EE) during the transitional process. As EE’s and AE’s economies intrinsically differ in terms of the level of financial and economic development, it is to be expected for the financial regulatory reform to have asymmetric impact on both groups of countries. Possible, unintended adverse impact on emerging market might occur, both through the direct channel of transmission (via the direct implementation of the new regulation), but also through the indirect channel, as the foreign banks in the emerging market change their behavior in response to the new regulatory standards. The deleveraging process is one of the well known indirect impacts, with large consequences, particularly in the emerging Europe. As the international regulatory reform process is very complex, some of the measures have long sequencing of implementation, and for some of the reform areas there are more observations and analyses to be done to define the final contours of the new financial system, more precise assessment of the impact seems challenging.

Anita Angelovska-Bezoska: Financial regulation, implementation and transition effects on emerging market economies Speech by Ms Anita Angelovska-Bezoska, Vice-Governor of the National Bank of the Republic of Macedonia, at the Fourth OMFIF Main Meeting in Europe, Ankara, 5–6 September 2013. *  *  *  Special thanks for the preparation of the background note to Ana Mitreska, Monetary Policy and Research Department and Natasa Andreeva, Financial Stability and Banking Regulation Department. Mihajlo Vaskov and Ljupka Georgievska also contributed to the drafting of the Note. Background note prepared for the participation of the Vice Governor Anita Angelovska Bezoska at the Fourth OMFIF Main Meeting in Europe, Ankara, Turkey, 5–6 September 2013. Since the onset of the global financial crisis the financial regulatory overhaul has been put high on the policy agenda with the aim of increasing the resilience of the banking system and thus promoting global financial stability. Stronger banking system will be better placed to absorb financial or economic shocks and prevent transmission of these shocks to real economy. The regulatory reform basically addresses the lessons learned from the crisis that insufficient capital and liquidity buffers, non-adequate on and off-balance sheet risk coverage and excessive leverage can undermine the stability of the financial system leading to contraction of the economic activity that can further aggravate the financial instability and require public sector intervention to avoid full-blown banking crisis. In this vein the reform will undoubtedly contribute to creating more sound and resilient banking system that is a key for sustainable growth.