’ required reserves with the national bank of serbia with an aim to strengthen the local currency and longer term liability side of the banks ’ balance sheets. reserve requirements for local currency sources of bank funding were set to 0 % ( for maturities over two years ) and 5 % ( for maturities up to two years ). however, the reserve requirement ratio for fx sources of funding is set to 25 % ( for maturities over two years ) and 30 % ( for maturities up to two years ). the message intended for banks was the promotion of financial stability, namely : more long term funding and more local currency funding equals cheaper financing. also, daily liquidity loans and short - term dinar loans may be extended to banks by the nbs only against the collateral of dinar securities issued by the republic of serbia and the nbs. in case of need, the nbs will also conduct dinar liquidity - providing repo operations, again against the collateral of dinar securities. to encourage interbank fx swap trading and the development of the fx hedging market, the nbs continued conducting 3 - month fx swap auctions in 2011. 2. in may 2011, the nbs adopted the decision on measures for safeguarding and strengthening stability of the financial system. the decision entering into force in june 2011 introduced a set of measures regarding fx - denominated and fx - indexed lending to citizens : a ) fx - denominated and fx - indexed loans may be approved only subject to a down payment or placement of deposit of no less than 30 % of the loan amount. this rule does not apply to housing loans ; b ) the ltv of fx - denominated and indexed mortgage loans are limited to a maximum of 80 % ; c ) loans may be indexed only to the euro, i. e. banks can no longer grant loans indexed to the swiss franc and other currencies. 3. the law on the protection of financial services consumers, which entered into force in early june and is implemented as of december 2011, prescribes an obligation for banks to primarily offer to their clients loans in dinars, and to provide an fx linked product only at client request. in such a case, bank is obliged to warn their clients of the fx risk they assume. 4. by the end of 2011, preparations for introduction of basel ii in 2012 were completed. domestic banking sector was recapitalized to a large extent and new risk management capacities with the

global - wide impact because of the underlying interconnectedness. the issues of trust, robustness of markets and financial infrastructure, counterparty - risk, information gap, as well as, liquidity will become important possible triggers of the future market disruptions. in addition, geopolitical events or trade tension can also lead to disruptions in global liquidity and trigger a global - wide impact. the main message here is that, going forward, future crises will be different. they will relate less to misalignment in the individual economies because of better policy and regulation, but will relate more to the resiliency of the global system, market and institutions, as well as the ability of the policymakers to prevent or address the vulnerabilities beforehand. forth, for emerging markets, the most threatening externally - induced crises going forward will be those that relate to the concentration of global liquidity, either too much or too little, in the form of large, persistent, and volatile capital flows that overwhelm the capacities of individual countries to manage and adjust to. and the most worrying aspect of this is that the trigger would lie outside the controls of emerging market ’ s policymakers since the flows would be the results of market conditions and policy prescription elsewhere. let me now turn to my second observation on the implications that the changing nature of future crises can have for the conduct of ewe going forward. on this, i have four points to make. first, in view of the changing nature of future crises, it is therefore important that the thrust of the ewe is mindful of this possibility. in my view, the focus of ewe should expand beyond macro - misalignments based on historical relationships to include assessing the robustness and the resiliency of the systemically - important markets, system, and institutions. this means the key objective of ewe will not be to forecast future crises per se, but to identify vulnerabilities in the most important areas in advance, especially those risks that are not covered by market data or by the surveillance process elsewhere. second, for ewe to be effective and comprehensive, it should be done at two levels to cover both the global dimension and the country - specific dimension of risk. the global dimension must be the responsibilities of the imf and the fsb given their comparative advantage as international organization. and as i already noted, ewe by the imf and the fsb should focus on monitoring the development of risk in the