##y dinar household loans ( lhs ) dinar corporate loans ( lhs ) euro - indexed household loans * * ( rhs ) euroindexed corporate loans * * ( rhs ) 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 source : nbs. * excluding revolving loans, current account overdrafts and credit card debt. 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 source : ministry of finance. * excluding coupon securities with the rate linked to the nbs key policy rate. fiscal policy was also immensely helpful in preserving price and financial stability, however, it caused some feedback effect as well. as monetary policy was eased, interest rates on dinar government bonds were lowered by more than 7 percentage points, depending on maturity. this significantly lowered the costs of dinar government borrowing, which, together with a more favourable economic environment and in conditions of low inflation and a relatively stable exchange rate of the dinar to the euro, rendered fiscal consolidation more successful. lower interest rates meant lower costs for everyone – the corporate sector, citizens and the government. significantly lower interest rates, accelerated economic activity and labour market recovery led to a rise in loan demand. on this account, lending recorded positive y - o - y growth rates since the second half of 2015, despite the maturing of considerable amounts of subsidised loans and increased efforts of banks to resolve the issue of non - performing loans. since the start of 2015, new investment loans were approved at a significantly faster pace, their total volume over the past two years equalling the level of total new investment loans in the four years before that. investment loans were one of the sources for funding investment in the new investment cycle, thereby contributing to a pick - up in economic growth. during 2017, the y - o - y rise in loans accelerated and arrived at 4. 5 % in june, or 6. 7 % excluding the effect of npl write - offs. in the prior period, financial stability has been preserved, the share of npls in total loans dropped significantly and the regulatory framework has been improved. owing to the appropriate combination of measures of monetary and fiscal policies, serbia arrived at a more favourable macroeconomic position which, coupled with the nbs ’ s regulatory policy, also contributed to the stability of the financial system – our system

this area almost entirely with the applicable framework in eu countries. since august 2012, we have ensured the relative stability of the exchange rate, which is one of the factors of overall stability. the international environment in the prior period was marked by uncertainty arising from the diverging monetary policies of leading central banks, but also from the so - called greek crisis, the asian stock market crisis, shifting outlooks for global and chinese growth, the effects of brexit, geopolitical tensions, etc. to these challenges we responded adequately, owing to greater resilience of the serbian economy and the financial system, cautious monetary policy, as well as interventions in the foreign exchange market which were timely, fine - tuned and well - balanced in terms of the reaction to short - term pressures towards both the depreciation and appreciation of the dinar. expressed in numbers, in the last five years until july, the nbs intervened in the foreign exchange market by net selling eur 765 million, with the nominal depreciation of the dinar against the euro of 1. 5 %. this is significantly less than the net sale of eur 5. 7 billion in the five years before that, when the nominal depreciation of the dinar was 33. 2 %. bracing for the coming pressures by preparing a defence system at peaceful times and investing in stability during turmoil, the country ’ s gross foreign exchange reserves were preserved at an adequate level, measured by all criteria, while in net terms, they increased from eur 6. 6 billion at end - 2012 to eur 8. 4 billion at end - 2016. chart 7 dinar exchange rate chart 8 level of foreign exchange reserves ( in eur bn ) ( eur / rsd ) ( in % ) nbs foreign exchange reserves, gross nbs foreign exchange reserves, net 10. 2 10. 9 10. 0 period 6. 8. 2012 until today * 8. 2 10. 6 10. 4 9. 9 11. 2 period 1. 1. 2008 - 6. 8. 2012 12. 1 6. 7 6. 6 7. 8 7. 7 8. 4 8. 4 - 5 5. 1 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 6 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 eur / rsd ( lhs ) source : nbs. exchange rate daily volatility (