Surviving Low Interest Rates Central Banks in Kosovo and Other Western Balkan Countries: Republic of Kosovo

Author: Mr. Si Guo

Interest income from foreign reserves is one of the main revenue sources for most emerging market central banks.

Volume/Issue: Volume 2023 Issue 027

Publication date: April 2023

ISBN: 9798400241079

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Topics covered in this book

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Banks and Banking , Investments and Securities-General , Economics- Macroeconomics , Money and Monetary Policy , International - Economics , Central bank , Low interest rates , Kosovo , Montenegro , Bosinia , Herzegovina , interest income , central banks in Kosovo , emerging market central banks , rising interest rates , personnel cost-to-GDP ratio , Income , International reserves , Central bank rates , Government securities , Exchange rate arrangements , Global

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Summary

Interest income from foreign reserves is one of the main revenue sources for most emerging market central banks. For central banks in the Western Balkan region, the low global interest rates during 2008–2021 negatively affected their revenues, and the impact was more pronounced for central banks in Kosovo, Montenegro, and Bosnia and Herzegovina because they cannot use seigniorage to finance their operations. This paper explores how these central banks coped with the long period of low-interest rates. The main finding is that the decline in interest income from foreign reserves was partially compensated by higher fees, commissions, and other regulatory revenues.