liquidity management. at the same time, their price is very easy to compute – the future exchange rate depends on today ’ s exchange rate plus the differential between interest rates – the key policy rate of the nbs and refinancing rates of the foreign currency – over the duration of the forward contract. these simple contracts may be amalgamated into more complicated derivative instruments – such as currency or interest rate swaps, or options – tailored to the needs of particular businesses. although these products are less straightforward to think about, the banks should be working closely with their clients in providing adequate advice on how to use them as a means of effective hedging rather than speculation. expanding on the use of hedging instruments is therefore a big challenge for the commercial banks. although the situation is improving, only 14 out of 34 banks offer derivative instruments to their clients today. account managers in banks often do not understand how the derivative instruments could be used in helping the clients. also the share of inter - bank fx forward trading remains very small – less than 5 % of the overall market. this is surely less than the hedging needs of our economy. the lack of competition in providing hedging instruments among banks sometimes also implies that even the simple instruments such as forwards are overpriced, discouraging businesses from using them more often. and this is the challenge for the national bank of serbia too. we are committed to provide for a greater use of fx forward and derivative product both in the interbank market as well as by the corporate sector. the recently introduced fx swap operations of the nbs are an example. we will also work with the banks in standardizing their offer of forward contracts to the clients. our aim is that every bank offers such a standardized product so that the prices can easily be compared. we will set up a call center advising businesses on such products, provide a simple calculator of forward prices on our website and conduct other promotional and educational activities. besides, we will be actively encouraging banks ’ account managers to develop and offer hedging strategies tailored to the needs of their clients. a greater use of hedging instruments will have many benefits. with most of the foreign currency needs covered by hedging instruments, companies will be able to construct their financial plans irrespective of currency movements. higher demand for such instruments from businesses will stimulate more competition and lower prices among banks. and a greater use of forward instruments among banks will also reduce exchange rate vol

governor ’ s address at the economic policy dialogue, 19 may 2020 esteemed and dear colleagues, let me thank you on behalf of the national bank of serbia for your assessments and recommendations. in your conclusions you highlighted that last year the serbian economy grew by 4. 2 %, while serbian monetary policy was adequate and consistent with the inflation targeting regime. we fully agree with that assessment, given that inflation in serbia has been low – 2 % on average, for seven years in a row. cpi developments contributions to y / y core inflation ( y / y rates, % ) and contributions ( pp ) ( pp ) food core inflation * energy other cpi inflation tolerance band inflation target infl. exp. fin. sector ( bloomberg ) 2. 2 0. 6 1. 4 - 2 - 4 - 1 1 4 7101 4 7101 4 710 1 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 sources : sors and nbs calculation. other restaurants and hotels home appliances pharmaceutical goods and medicines clothes and footwear rents and housing costs travel packages automobiles and transport core inflation 1 4 7101 4 7101 4 710 1 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 sources : sors and nbs calculation. in serbia we recorded a sharp fall in npls since 2015, while our “ banking sector remains well - capitalised and liquid according to several metrics ”, which is a quote from joint conclusions and we fully agree with it. corporate loans have been growing at two - digit rates for several years already, with two - thirds of the growth channelled to micro, small and medium - sized enterprises. investment loans worth around eur 5 billion make 45 % of total lending to the corporate sector. dinarisation has remained one of our priorities. dinar savings have been recording new highs year after year. last year alone, they went up by as much as 30 %. owing to our measures, the spread between interest rates on dinar and fx loans has narrowed dramatically - from 9. 1 to the current 1. 1 pp. esteemed colleagues, a year ago we were in brussels, adopting joint conclusions and discussing the topic of foreign direct investments. but today, our task is much harder, as short - term prospects are quite uncertain. therefore