The Republic of Kosovo has taken a significant step in approving the legislative framework in the period (2024-2025) with the adoption of landmark law by the Kosovo Assembly in December 2024, namely the Law No. 08/L-304 on Banks, Microfinance Institutions and Non-Bank Financial Institutions (“Law on Banks”). The Law on Banks together with the Law No. 08/L-328 on Payment Services (“Law on Payment Services”) have been under constitutional review based on the request filed by members of the Kosova Assembly.
In this regard, the Constitutional Court of Kosovo annulled the Assembly’s decisions made in December 2024, and only three laws remained in force, including the Law on Banks. Based on the Constitutional Court of Kosovo, the Law on Payment Services was repealed along with others due to the procedures followed by the Kosova Assembly. Regardless of the decision by the Constitutional Court, these legislative reforms are set to enhance Kosovo’s financial sector by aligning its regulatory framework with European Union (EU) standards, fostering financial transparency, stability, and integration into the European financial market.
One of the most significant changes comes with the adoption of the Law on Banks, which focuses on improving stability, transparency, and compliance of banks with international standards. It also details the process of bank resolution, equipping the Central Bank of Kosovo (CBK) with enhanced tools to handle failing banks, a notable improvement over previous legislation. Additionally, the law emphasizes consumer protection, assigning the CBK a stronger mandate for financial conduct oversight, as well as increasing the minimum capital requirements for banks, thus enhancing the resilience and stability of the banking sector.
The current draft of the Law on Payment Services represents another transformative step for Kosovo’s financial framework. The current draft regulates the provision of payment services, creating a secure and efficient system that facilitates cross-border transactions and supports Kosovo’s integration into the European payment system. Furthermore, the law introduces the concept of “Open Banking,” allowing third-party financial service providers to access customer data (with consent) to offer innovative payment and banking solutions. Subject to adoption by the Kosovo Assembly, this legislation shall mark a significant modernization of Kosovo’s financial framework.
These legislative changes represent a significant milestone in Kosovo’s efforts to modernize its financial sector and meet EU standards. By fostering financial transparency, inclusion, and the free movement of capital, these reforms position Kosovo as a safer and more efficient financial hub and strengthen the country’s ties with regional and international partners. The introduction of a new legal framework has played a key role in promoting innovation, growth, and sustainable industry. The current legislative changes also include legislation on e-documents, data privacy and cybersecurity, consumer protection, e-money, and cryptocurrency.
In conclusion, Kosovo’s banking and financial sector has made significant progress in recent years, thanks to the introduction of new legislation and the adoption of advanced technologies. The new legal framework will play a key role in promoting innovation, growth, and sustainable industry, while also contributing to Kosovo’s digital agenda and investment climate. However, there is still room for further development and diversification of the market, particularly with the adoption of the draft Law on Capital Markets and the improvement of insolvency and bankruptcy laws and enforcement. By continuing to prioritize modernization, innovation, and comprehensive legislation, Kosovo’s financial industry will offer more investment opportunities, new financing alternatives, and contribute to the country’s further economic growth.
The information contained in this document does not constitute legal advice on any specific matter and is provided solely for general informational purposes.