Radovan Jelašić: Strengthening integration and cooperation in
Southeast Europe
Speech by Mr Radovan Jelašić, Governor of the National Bank of Serbia, at the Press
Conference of the European Fund for Southeast Europe (EFSE), Belgrade, 26 May 2009.
* * *
Dear Ladies and Gentlemen,
It is a pleasure to be here today with Dr. Klaus Glaubitt and Ms. Sylvia Wisniwski from the
European Fund for Southeast Europe - EFSE. Before they start their presentation on EFSE,
I would like to depict the current economic situation and describe EFSE's role in stabilising
the economies in Serbia and Southeast Europe as well as in promoting economic and
financial sector development in the region.
The financial crisis has been a huge liquidity shock. This means that investors, financial
institutions as well as businesses and households around the world have been scrambling
for liquidity. As we are all facing the effects of this "sudden stop", we have to undertake bold
measures, almost as bold as those which were taken at the fall of the iron curtain, however,
with one difference - this time it would be purely for the maintenance of stability and
standards of living, and not for their substantial increase.
The National Bank of Serbia - NBS - was relatively well prepared for the initial effects of the
crisis. As of today, the NBS has undertaken several measures in order to limit the impact of
the crisis on the banking sector, which include securing additional support from the
international finance institutions such as KfW, the European Investment Bank - EIB and the
European Bank for Reconstruction and Development - EBRD.
Time is critical for all parties and help from international finance institutions including from
vehicles such as EFSE is needed more than ever to: mitigate the impact of the crisis in the
region, resolve the prevailing credit crunch and, more importantly, to secure the stability of
the financial sector.
The stability of the financial sector remains the key pillar of a functioning market economy a
precondition of general stability. The services it provides like payments, deposits and loans
are fundamental for the entire economy, especially for micro and small enterprises. The
microfinance sector has been hit hard by the financial crisis, not only due to higher interest
rates but even more significantly due to the lack of availability of funds for such purposes.
In this respect, EFSE plays a key role in providing a stable funding source for development
finance and the micro and small enterprise sector. In times of economic crisis, continued
access to finance for small businesses is essential. They are at the heart of the economy.
Development finance must operate counter cyclically, which means fighting the credit crunch
around the globe, in particular in emerging Europe including Southeast Europe, and that is
exactly what EFSE does.
But apart from this financial dimension, EFSE is still taking on other roles in contributing to
financial sector development in Southeast Europe:
We appreciate EFSE's role as a responsible investor. As such, EFSE promotes responsible
lending practices in the region, refraining from promoting consumer lending or speculative
activities. Why is this crucial for financial sector development? The financial crisis was in part
caused by irresponsible lending practices, in particular by credit technologies employed in
the subprime market, the very origin of the current crisis. Against this background, there is
indeed the valuable lesson to be learnt that responsible finance is a must to ensure a sound
financial system.
Last but not least, I am proud to say that I, as well as my other colleagues from the Central
Banks of the EFSE partner countries, are all members of the EFSE Advisory Group. As such,
we are involved in EFSE's work. But it is more than a sole advisory board, serving EFSE as
an information source to stay abreast of financial sector developments in the region from a
policy maker's perspective. It provides a platform for regional exchange on financial sector
issues. Thus, it is a crucial vehicle to strengthen integration and cooperation in Southeast
Europe, which in these current times of turmoil has never been so important. No Southeast
European country has the resources or the means to make it out for the current crisis alone.
Thank you for your attention.