The financial system of the Republic of Macedonia consists of the National Bank of RM as a central bank, commercial banks, saving houses, exchange offices, insurance companies, financial lease companies, brokerage companies, swift money transfer companies, the Macedonian securities exchange market, the central securities depository, and the deposit insurance fund.

The banking system itself is two-tier, based on the Banking Law and the National Bank Law.

As of December 31, 2006, the banking system of the Republic of Macedonia comprised of nineteen banks and twelve savings houses. Three of the nineteen banks are authorized to conduct only domestic financial activities (defined in Article 45 of the Banking Law), fifteen banks are authorized to conduct all financial activities (defined in Articles 45 and 46 of the Banking Law), while the "Macedonian Bank for Development Promotion" performs specific financial activities in accordance with the Law on Establishing the Macedonian Bank for Development Promotion.

The foreign capital in the banking system is of exceptional importance because 56.1% of the banking capital belongs to foreign investors. From the total number of banks in the Republic of Macedonia, eight are owned by foreign shareholders, while four of these eight banks are owned by foreign banks.

As of December 31, 2006, the share of the private capital in the total shareholders' capital of the banking system equaled 93.1%, i.e. 98.4% if "Macedonian Bank for Development Promotion" a.d. Skopje, which is an entirely state-owned bank, is excluded from the analysis.

The Law on Leasing was enacted in 2002 and last amendments have been made in 2006.

Insurance companies usually provide the following types of coverage:

-Industrial Property Insurance;

-Civil property Insurance;

-Transport Insurance;

-Motor Vehicle Insurance;

-Life/Personal Accident Insurance.

Insurance companies perform their activities in accordance with the Law on Insurance Supervision. This law governs the conditions for life and non-life insurance and reinsurance, insurance brokering, in addition to the overall incorporation, supervision and termination of insurance and reinsurance undertakings.

The provisions of this law apply to insurance undertakings which have their principal offices on the territory of a foreign country while concluding insurance contracts or otherwise promoting their services in Macedonia.

Both legal entities and natural persons may incorporate insurance undertakings. A stockholder in an insurance undertaking cannot be a person who is subject to bankruptcy proceedings. The share capital of an insurance undertaking must be at a level not lower than the guaranty fund, as outlined in Article 77 of the law on insurance supervision.

The Article of Incorporation of an insurance undertaking defines the minimum amount of share capital necessary for the incorporation and operations of an insurance undertaking.