, central banks have considerable experience dealing with inflation that is above target and can act quickly to rein it in. in fact, given household debt levels, we think that interest rate increases could have a larger impact than in the past. if inflation were to surprise on the downside and remain stubbornly below target, that could be harder to deal with. given where the policy rate is today, there would not be much more conventional monetary policy could do. we have a greater appreciation of this risk now than we did before the global recession, when we were more concerned about the upside risks to inflation. if we were actually in a situation of secular stagnation, well, we would need to consider a different policy framework. one option that has been put forward would be to raise the inflation target in order to deliver negative real interest rates, since nominal interest rates can ’ t go below zero. 12 not only would we face the costs of higher inflation, we would also risk stoking financial imbalances. 13 we are weighing the risks to financial stability posed by a low interest rate environment. we have made it clear that household imbalances are at the top of our list of vulnerabilities. but monetary policy is not the primary tool to address these risks. regulation and supervision, the secular stagnation hypothesis posits that much of the current deficiency of demand is a structural feature of the economy. in order to explain why the structural deficiency of demand was not evident before the crisis, proponents of secular stagnation argue that it was masked by financially unsustainable growth prior to 2008. a more likely explanation is that deficient demand since the crisis has been due to deleveraging and uncertainty in many jurisdictions. in canada, weak global demand is a more obvious explanation than secular stagnation. moreover, the data suggest that as headwinds dissipate, growth is picking up and output gaps are closing in many economies, including canada and the u. s. o. blanchard, g. dell ’ ariccia, and p. mauro, “ rethinking macroeconomic policy, ” imf staff position note, 12 february 2010, spn / 10 / 03 ; p. krugman, “ inflation targets reconsidered, ” draft paper for ecb sintra conference, may 2014. some, including delong and summers ( 2012 ) and summers ( 2014 ), have argued that stimulative fiscal policies should be used

still faster spreading of electronic forms of payment. this all the more so since counterfeiters today have no limits, while counterfeit dinar and euro banknotes may enter the country from all over the world. by preserving the stability and the strength of the national currency, serbia ought to prove that it can successfully go through the transition phase, however demanding and difficult it may be, and qualify in that manner for accession to the european union and for the switch to the euro, the single currency in the eu, without taking any shortcuts. serbia is a serious country and should not use another country ’ s currency, especially without prior approval! however, i must point out that the stability of the dinar entails a responsible fiscal policy, a wage policy based on productivity, as well as implementation of structural reforms in practice. if the quality and speed of reforms were measured in words, in particular those said in the past several months and weeks, we would have entered the european union a long time ago! in september last year, when talking about the necessity of implementing structural reforms, i stated that it is high time something were done in this respect, which at first came as a surprise for some people, only to be confirmed later on, but only in words, and not by any concrete steps taken by the government. as the time goes by, all we are left with is the hope that the reason for such state of things is lack of readiness, rather than any lack of understanding regarding what needs to be done. dragging out “ mothballed ” ideas, such as the distribution of free shares to employees in public companies, pushes structural reforms more than 10 years back. the concept of “ patching up ” the economy and standard of living through monetary and foreign exchange policy, while sitting idly and observing the inefficiency, abuse of monopolist status, and, to be entirely honest, significant political influence in a large number of public companies, cannot and should not be allowed and is also fully unsustainable. the time has come for all of us to stop for a moment and remember pre - october 5th programmes and proclamations, and ask ourselves whether anything real is being done today or is this just a way to buy time! i believe that personal example is the best example and that no one can give advice and lectures on reforms to others unless they are implementing these same reforms in their own house – the national bank of serbia. in the past year, we have