1 Denar – North Macedonia

In 2016, the currency situation in North Macedonia (then the Republic of Macedonia) was characterized by a stable but carefully managed exchange rate regime. The country operated under a de facto currency board arrangement, with the Macedonian denar (MKD) pegged to the euro at an approximate fixed rate of 61.5 denars per euro. This system, administered by the National Bank of the Republic of Macedonia (NBRM), had been in place since 1995 and was credited with delivering decades of low inflation and monetary stability, providing a crucial anchor for the small, open economy.

However, this stability was tested by a significant political crisis that began in 2015 and extended throughout 2016. A deep political deadlock, involving mass protests and revelations of a wiretapping scandal, led to prolonged uncertainty and delayed reforms. This environment triggered capital outflows and pressure on foreign exchange reserves as confidence wavered. The NBRM was compelled to intervene periodically in the foreign exchange market to defend the peg, leading to a notable drawdown of reserves, which fell by approximately €500 million over the course of the year.

Despite these pressures, the currency board remained intact and the denar's peg to the euro was successfully maintained throughout 2016. The NBRM's commitment to the regime was unwavering, and the situation did not escalate into a currency crisis. The episode highlighted the regime's resilience but also its vulnerability to domestic political shocks, underscoring that the primary risks to monetary stability were not external economic factors but internal political fragility and the resulting erosion of investor and public confidence.