does not mean that the national bank of serbia should not act in coordination with the government. to the contrary, joint work on achieving and maintaining a low rate of inflation will yield the optimal result. but, central bank independence means that the nbs will not directly pursue objectives relating to social or quasi - developmental policies, employment, exports or regional development, or, even less, to electoral timing, but that it will implement a monetary policy that ensures price stability and thereby achieve all of the above listed objectives. as many as two centuries ago, dositej endeavoured to bring serbia closer to europe. today, we have a duty to continue his efforts – a duty both to the past, but even more so to the future. harmonization with european standards must not, however, serve as a disguise for “ adjustment ” to internal daily political needs, especially when it comes to such an important institution as the national bank of serbia.

##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