radovan jelasic : issues of key importance for the national bank of serbia and also for the country speech by mr radovan jelasic, governor of the national bank of serbia, at the serbian economic summit, belgrade, 4 november 2008. * * * ladies and gentlemen, regardless of all political and economic challenges during the last two years, serbia managed to maintain its economic stability. and the challenges have been quite a few, what with things like adoption of the new constitution, early elections, presidential elections, kosovo issue and again early elections, oil and agricultural shocks, etc. however, the challenge we are currently facing comes from abroad and forces upon us a new set of rules, puts things into a different context and requires a different perspective – if not to adopt a completely new pattern of thinking and working criteria then at least to think and work faster and more efficiently. and though i am convinced that serbia will again be successful in fighting these difficulties, allow me to point out today some issues of key importance, not only for the nbs, but for the country as a whole. these are as follows : 1. market has grown less tolerant now of eventual mistakes in macroeconomic policy as we are still paying for the mistakes made in earlier years. the speed and intensity of change in the course of the last several days is unprecedented in modern history : spreads double overnight, first rate institutions lose their hard earned reputation, state ownership is not only commended but positively reflected in prices of shares, while valuation of balance sheet items at market prices – one of the key pillars of market economy – is suddenly put aside for better times. but what are the implications for serbia? the spreads are changing now, even the exchange rate, and we are receiving bills for all that we have not, or have only partially done. however, it is solely up to us how we shall proceed, whether we are ready for a complete overhaul or shall try to muddle through for some time yet. serbia still has two choices : a ) not to change anything of consequence or to make only slight changes which would contribute to further growth in consumption and increase the current account deficit, hence necessarily leading to a change in the exchange rate, problems in budget execution and higher inflation, or b ) to make a turnaround in its economic policy, freeze consumption and allow only for the increase in capital investment. fare meter is ticking and each day lost is a loss for serbia. i am convinced, however, that we not only

rhs ) * as at 31 / 07 / 2017. 6. 5 5. 9 source : nbs. confidence in the dinar is also returning slowly, as evidenced by the rising degree of dinarisation. macroeconomic stabilisation, significantly lower dinar loan rates and measures promoting saving and borrowing in dinars provided a contribution to the increase in the degree of dinarisation. consequently, the share of dinar loans of households rose from 35 % at end - 2012 to almost 50 %, where it now stands, while at the same time the share of dinar deposits in total deposits also rose from less than 20 % to around 30 %. as of last year, banks introduced dinar housing loans approved at interest rates below 5 % and for the period of up to 30 years. last year, a top - rated international financial organisation issued the first dinar securities and the proceeds were used for dinar lending. bearing in mind how deep the roots of euroisation go, we are aware that dinarisation will be a gradual process, but the important thing is that it has begun and that it will remain one of our strategic priorities. chart 9 dinar share in total bank deposits of corporates and chart 10 share of dinar in total bank receivables from households corporate and household sectors ( in % ) ( in % ) household sector, stock ( lhs ) household sector corporate sector, stock ( rhs ) 1 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 7 9111 3 5 source : nbs. corporate sector total dinar receivables i ii iii iv i ii iii iv i ii iii iv i ii iii iv i ii iii iv i ii iii iv i ii iii iv i ii source : nbs. the business and investment environment is more stable. over the past five years, the nbs managed to achieve and maintain price and financial stability, thereby meeting its statutory objectives and contributing to the creation of a more encouraging business environment, a fall in the risk premium to its lowest level and improvement in the country ’ s credit rating, progress on the doing business list and prospects for the coming period. the practical chart 12 financial result of the corporate sector ( in rsd bn ) chart 11 current account deficit and fdi ( in % of gdp ) cad exchange rate losses fdi, net interest expenses financial result of the corporate