The Impact of the Required Reserve on the Monetary Multiplication in the Republic of Macedonias

• Main Authors: Aleksandar Dejanovski, Dori Pavloska Gorgioska
• Format: Article
• Language: English
• Published: UIKTEN 2014-11-01
• Series: TEM Journal
• Subjects: Required reserve ratio; financial system; The National Bank of Macedonia; monetary policy.
• Online Access: http://www.temjournal.com/documents/vol3no3/The%20Impact%20of%20the%20Required%20Reserve%20on%20the%20Monetary%20Multiplication%20in%20the%20Republic%20of%20Macedonia.pdf

One of the primary and most important tasks of any central bank is conducting monetary policy in the state. In Macedonia the only central and issuing bank is the National Bank of Macedonia, which is responsible for the monetary and financial stability in the country, while performing important functions, without which the overall economic and financial system could not exist. In exercising its functions, the National Bank of Macedonia uses a set of economic instruments and policies, from which in RM the most efective is the required resserve. This monetary tool is showing the best results in developing countries where the financial markets are not developed and where there is a high concentration of the banking sector (in RM banks occupy a good 98% of total financial institutions). The role of the reserve will be analyzed through the prism of its effects on the process of multiplication the money supply in the country and its contribution to generating or withdrawal of money by the central bank. The main goal of the paper is to research the required reserve, as a monetary instrument, and to qualify its impact on the monetary creation in the Republic of Macedonia. The basic methods, used in this paper are the positive analysis, comparative analysis and deductive approach.