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, banks' account with the NBRM and cash in the banks' vaults), M1 (currency in circulation and transaction deposits), M2 (M1, Denar and foreign exchange deposits with a maturity of up to one year), M3 (M2 and restricted deposits) and M4 (M3 and Denar and foreign exchange deposits with maturity of over one year). The movement of these aggregates is monitored in line with the adopted projection. The money demand, by the definition, is determined by the income level, the price level and the short-term and the long-term interest rates. On the basis of the previous practical experience, the money demand in the Republic of Macedonia is relatively unstable, primarily due to the transitory and the external shocks, as well as the effect of the currency substitution.

Interest rate policy and transmission mechanism

With the monetary policy being directed towards preserving the Denar exchange rate stability, the interest rates and the money supply are endogenous variables, determined by the achievement of the intermediary goal. The NBRM, through its interest rate policy, sends monetary signals to the banks, thus making efforts to influence their lending and deposit interest rates. The lowest interest rate of the NBRM is the discount rate, whereas the highest is the interest rate on the Lombard credit. Currently, the referential interest rate in the economy is the interest rate registered on the CB bills auctions, with respect to its close relation with the interest rate on the Money Market. Due to the higher liquidity in the banking system, no need of organizing credit auctions has been registered over a certain period. However, the transmission canal of the monetary policy through the interest rates in the Republic of Macedonia is still insufficiently developed, considering the insufficiently developed financial market, the rigid interest rate policy of the banks and their insufficient responsiveness to the monetary signals of the NBRM.

DENAR EXCHANGE RATE POLICY

Exchange rate policy

According to the National Bank of Macedonia Law (Official Journal of Republic Macedonia nr. 3/2002 & 51/2003), the National Bank of Macedonia establishes and executes the denar exchange rate policy in order to achieve the main purpose – the conservation of the price stability.

Current foreign currency system

According to article 33 from the currency policy law, the denar rate is determined by the simple rule of offer and demand for foreign currencies in the currency market. The denar rate in relation with the Euro is fixed by the reports from different banks that take part in the currency exchange market. As for the other foreign currency, the rate of the denar is determined by the relation between these currencies and the Euro rate, which is fixed by the European Central Bank. The buying and selling rate is calculated with the addition and deduction of 0.5%. In fact, this is the way how the National Bank of Macedonia exposes every day the approved currency rates on the Currency List.

The execution of the currency policy

According to the denar rate targeting strategy, as an important 本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。