The banks restraint over crediting is a result of several factors. One is the economic crisis in the Euro area, the deceleration of our economy last year, the banks prudency, the rise of the bad placements. Another very important factor is the condition in the parent banks of some of the owners of our banks, you know that they mainly come from the Euro area, some of them have serious problems in their own countries and they face with serious challenges, although their banks in Macedonia have extremely good quality and they are in good condition, since the strategy is developed at the level of the group, the problems in the parent bank prevail so they can have conservative strategy also in our country. This exactly was the reason that caused panic in the public, that some banks have problems in their main offices. Has the situation been stabilized a little in this regard? The situation here is mainly stable. Although there are occasional rumors in the public, the data do not mirror that, and we did not have registered, in any moment, that the deposits plunged with the banks the main offices of which are facing with problems. The deposits, generally, were increasing during all these past several years.
What we have learned will, as you would expect, inform our considerations of potential Solvency II reform. 1  https://www.bankofengland.co.uk/speech/2018/david-rule-2018-conference-on-bulk-annuities-and-longevity-risk-transfer and https://www.bankofengland.co.uk/speech/2019/david-rule-westminster-and-city-programmes-2019-bulk-annuities-conference 2 https://www.gov.uk/government/publications/solvency-ii-review-call-for-evidence 2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  1. Market developments since 2019  The annuity market largely bifurcates into bulk purchase annuities and the purchase of annuities from personal and occupational pensions. Since David spoke to you in 2019 the growth in the bulk annuity market has continued, and is expected to continue [Chart 1 in the Appendix]. From our perspective, the additional capital that annuity firms bring to back these pension obligations provides increased security for scheme members, and gives pension scheme sponsors the opportunity to benefit from de-risking. For some insurers, annuities are part of a wider product set, diversifying with for example term assurance or general insurance products. But for specialist annuity firms the increase in annuity sales leads to concentration in both longevity and credit risk. Chart 2 shows the composition of the solvency capital requirement (SCR) across a range of specialist and mixed-line annuity firms: What this chart does not convey is that the longevity component would be notably larger were annuity writers retaining all of this risk. We are aware that the design of the risk margin has had a number of unwelcome effects such as adding excessive balance sheet volatility which has contributed to longevity risk being something many annuity writers continue to look to cede.