Annual Report 2010 03 August 2011 - Banka Qendrore e ...

CBK
Annual Report 2010
4. Supervision of Financial Institutions
As of its establishment, CBK has a licensing, regulatory and supervising authority over all
financial institutions in Kosovo, and as such it contributes towards development and
modernization of financial sector in Kosovo. Currently, the financial sector in our country
consists of banking industry, insurance industry, pension funds and other financial
institutions (microfinance institutions, non-bank financial institutions, exchange bureaus
for currencies and payments and money transfer institutions).
Even in 2010, taking for granted the best international standard in financial sector
development, CBK continued to invest in promoting licensing effectiveness and efficiency
and the financial supervision regulative aiming at further promotion of a competitive
financial sector based on economy market.
Based on Basel Core Principle on effective supervision of banking system, in 2010, steps
have been take towards capacity building for risk profile-based supervision in banking
sector, aiming at a supervising synergy which is expected to be reflected in a more effective
coordination of micro-prudential and macro-prudential supervision. Also, with purpose to
establish as fair as possible the risk-based solvency, good steps have also been taken in the
insurance industry towards adoption of basic principles set forth under Solvency II
framework.
In accordance with its duties and authorities established by law, CBK in 2010 initiated a
revision of legislation relating to all key constitutive systems of financial sector. Law on
Deposit Insurance System in Kosovo was adopted in the end of 2010, while the functionality
of deposit Insurance Fund will be completed in 2011. Also, the first versions have been
drafted for the law on commercial banks, microfinance institutions and other financial nonbank
intuitions, then the draft law on compulsory motor third party liability insurance, the
draft law on general insurances and it is worked on the amendment o law on pensions.
4.1. Licensing and Methodology
One of the main CBK functions is to ensure supervision and regulation of financial
institutions, with purpose to establish a sound, sustainable, competitive and reliable
financial system and which provides a wide range of financial services. The direct
responsibility for accomplishment of this mission falls on directorates, such as Licensing
and Methodology Directorate, Bank Supervision Directorate and Insurance and Pension
Supervision Directorate.
4.1.1. Licensing
Criteria and conditions to obtain a license for exercising banking and financial activities by
banks and other financial institutions in the Republic of Kosovo are established under Law
No. 03/L-209 on Central Bank of the Republic of Kosovo and other sublegal acts adopted by
the CBK. Pursuant to legislation governing it statutory functions, CBK has authority to set
criteria for licensing of financial institutions and to reject those which do not fulfill these
standards.
Licensing criteria established under legislation, aim at ensuring a fair financial market and
regulated through a process based on the principle of justice, honesty and equality.
Licensing conditions and criteria are of supervising character and do not intend creating
barriers against investors. Entry of foreign investors in financial market of the country
| 57