Since the global financial crisis, the euro area banking sector has been going through a gradual restructuring process, which involves the search for new business models, the adjustment to the revised regulatory regime, consolidation and the resolution of nonperforming assets3. In fact in 2020 the number of completed mergers and acquisitions in the banking euro area increased even though this type of M&A had been decreasing since 2010. In an effort to further contain costs and consolidate the banking sector, the number of euro area banks and branches has continuously declined by approximately 30% since 20084. Incumbent banks must restructure and improve on technology and efficiency simultaneously with the entry of new competition also from Bigtech. Technology giants are entering financial services as their next related business. Global technology giants have built extraordinary market advantages: large and engaged  2/4  BIS - Central bankers' speeches  customer network; huge data enabling robust and increasingly precise understanding of individual customers, experience in scaling innovative technologies and because of their size, access to low cost of capital. BigTech players have already gained a foothold in financial services in select domains such as payments and in some cases lending and insurance. However, digitalisation also poses significant financial and operational risks, both in the banking sector and in the Fintech / BigTech companies, themselves. The Financial Stability Board5 has recognised a number of operational risks, including: 1. Operational risks of third-party reliance that are transferred to banks.

The share of the external debt in GDP accounts for 42.0%, which ranks the Republic of Macedonia in the countries with moderate to medium degree of indebtedness. Sound and stable banking system in the Republic of Macedonia In 2000, the banking sector of the Republic of Macedonia continued to recover from the adverse effects caused by the external shock in 1999. The share of high-risk credits in the total credit exposure of the banks in the first nine months of 2000 reduced by 4.1 percentage points, however, still remaining high at the level of 37.3%. Nevertheless, the high average capital adequacy ratio of 33.8% at the end of September 2000, positively affects the banking system stability, by far exceeding the required minimum of 8%. Significant investments of foreign capital in the Macedonian banks was registered in the first six months of 2000, increasing the share of the foreign capital in the total banking capital from 19% to 33.3%. In 2000, the legal framework regulating the banks’ operations was subject to fundamental improvement. In that context, the newly adopted Banking Law in July 2000 is of great importance, in which preparation the National Bank of the Republic of Macedonia had a considerable contribution. This Law represents a step towards the harmonization with the European legislative and the European Union Directives and achieves greater degree of compliance with the so-called Core Basle Principles for Effective Banking Supervision. In November 2000, certain changes were made in the regulation on banks’ foreign exchange operations, as well.