jorgovanka tabakovi : confidence remains the cornerstone of banking speech by dr jorgovanka tabakovi, governor of the national bank of serbia, at the bloomberg adria's " finance industry trends 2023 " conference, belgrade, 31 march 2023. * * * ladies and gentlemen, we live in a changing world. banks and models of operation change. but what does not change is the cornerstone of banking – confidence. what does not change is the fact that banks are there for the sake of people – clients, owners and managers. whenever some of the players, particularly those who lead and manage banks, underestimate confidence, they arouse fear, which is a bad ally to banks and may wreak havoc in the financial system. " can anybody remember when the times were not hard and money not scarce? ", is a well - known question posed by american philosopher ralph waldo emerson. this question is topical even after almost two centuries. it is relevant today perhaps more than before as in the past three years we have witnessed circumstances unprecedented in modern history. what will 2023 bring? it will be plagued by uncertainty for all market participants and policy makers alike, which is why the preservation of stability and foundations of sustainable growth is a priority. this first regional conference organised by bloomberg adria, whose central topic are finance industry trends in 2023, recognises the importance of regional cooperation and digitisation that connect markets, as well as the importance of a stable business environment. the countries pursuing sound economic policies before the crisis and strategically investing in sustainable development responded better to all the challenges. many independent institutions have highly positively assessed serbia in light of its long track record of good macroeconomic performance and a proven capability to respond proactively to various shocks from the international environment. i will therefore touch on three topics : 1. macroeconomic environment for operation of serbian banks, 2. stability and resilience of the domestic banking sector, 3. easier, faster, more accessible and secure financial services. macroeconomic environment for operation of serbian banks i will start with the conclusion that owing to our efforts the conditions of doing business in serbia have remained stable, despite the pandemic, global effects of the ukraine conflict and global energy and food crises. at the level of last year, the dinar gained 0. 2 % against the euro. we have preserved its relative stability in the year so far as well. 1 / 5 bis - central bankers'speeches at end - february

, the country's fx reserves hit their record high of eur 21. 2 bn. last year, the national bank bought eur 1 bn net in the interbank fx market. since the start of this year, we have bought additional eur 435 mn net. confidence in the financial system has also been preserved, as confirmed by the continued rise in total deposits in banks, which in late 2022 exceeded the 2019 figure by over 40 %. the npl share in total loans was reduced to a record low of 3 % at end - 2022. during the three crisis years – from 2020 to 2022, serbia was recording real economic growth of around 9 %. this year, real growth is expected to equal between 2 % and 3 % and gdp per capita to reach around eur 10, 000 for the first time. the unemployment rate is at its lowest, and private sector formal employment at its highest – close to 10 % above the pre - pandemic level. this means that 150, 000 more people are employed now than before the pandemic. in december, total average wage was higher by 36 %, while private sector wage exceeded the precrisis figure by as much as 46 %. we have also ensured conditions to attract a record high level of fdis, worth eur 4. 4 bn last year, i. e. 7. 1 % of gdp. stability and resilience of the domestic banking sector ladies and gentlemen, i began my address with the macroeconomic environment in which banks in serbia operate as trends in the financial industry always depend on real sector developments, and vice versa. good regulations and efficient supervision of financial institutions are also important. while some countries have a complicated supervision system and a huge problem of coordination among different supervisors, the banking sector supervisory function in serbia is exercised by a single institution – the national bank of serbia. the advantages of such organisation of the supervision system and the quality of supervision are reflected in a stable financial system. it is confirmed now as well – during the current developments in the international financial market – that the national bank of serbia is rightly cautious in easing its regulations. we do nothing " on request ". we do not fulfil anyone's wishes as we are guided by financial system security and the protection of interests of depositors and bank clients. this is our statutory objective and it is only in such way that we can best contribute to overall stability. that the nbs's approach is adequate