jorgovanka tabakovic : national bank of serbia remains synonym for stability and trust address by dr jorgovanka tabakovic, governor of the national bank of serbia, at the economic and financial dialogue between the eu and the western balkans and turkey, 12 july 2021. * * * good afternoon everyone, at the very start, i wish to greet you on behalf of the national bank of serbia and to thank you for having recognized the scope of our response to the pandemic. in your estimate for serbia you stated that “ the impact of the covid - 19 crisis was mitigated by а strong pre - crisis momentum ”, also on account of “ prudent policies during past years ”. i add to that that in serbia we did not wait for the crisis to recognize the importance of building buffers or to recognize our development chances. we worked strategically to broaden the base of investors and markets, which is also reflected in your assessment that the “ contraction of goods exports in serbia was limited due to their diversification achieved in earlier years ”. this is the right moment to mention president aleksandar vucic. without his strategic decisions, we wouldn ’ t be able to talk today about serbia ’ s strong response to the pandemic or about the fact that our gdp exceeded its pre - crisis level already in the first quarter of this year. you also stated that “ in a timely and forceful response to the pandemic, the national bank of serbia has taken a range of measures to maintain price stability and support the economy “. here i wish to add that the national bank of serbia was often “ the first resort ” of responses, supporting our citizens, businesses and the government to more easily overcome the crisis financially. we also ensured smooth functioning of all financial flows during the pandemic. we lowered the key policy rate, provided dinar and fx liquidity, introduced facilities for the repayment of obligations. we also bought government securities in the secondary market and broadened the collateral for monetary operations. in doing all this, our message was clear – we respond to temporary shocks with temporary measures. what are the effects of the national bank of serbia and the government measures? lending activity has remained a stable source of financing the private sector. its structure in terms of currency, sector and purpose contributes to the even recovery of consumption and investment. the dinarisation of corporate loans is by over 9 percentage points higher compared to the precrisis period.

commercial banks. therefore, as a result of all the activities undertaken, the banking sector in the republic of serbia has remained stable, highly liquid and profitable. all relevant performance indicators are significantly above the prescribed minimum values. the serbian financial system is extremely bank - centric : commercial banks are the dominant market participants with a share of around 90 %. net assets of the banking sector are continuously growing and reached rsd 6, 050 bn ( eur 51. 7 bn ), accounting for 74 % of gdp in april 2024. at end - march 2024, the capital adequacy ratio at the level of the banking sector was almost 22 %, with a favourable capital structure. the liquidity of the banking sector is also at a very high level, and the values of all relevant indicators are constantly considerably above the prescribed minimum values. i will also mention that from june 2024, banks in serbia are obliged to calculate and maintain the net stable funding ratio ( nsfr according to basel 3 standards ). in addition to harmonising domestic regulations with those of the eu, the goal of introducing this indicator is to strengthen the structural liquidity of banks. however, all the while we were thinking about our citizens and the effect of higher interest rates on their living standards. we adopted the decision on temporary measures for banks relating to natural persons'housing loans. by adopting this 2 / 3 bis - central bankers'speeches temporary measure, the national bank of serbia once again showed responsibility and acted preventively in order to maintain the stability of the financial system in the uncertain circumstances of fluctuating interest rates, instead of waiting for the materialisation of negative effects and the build - up of non - performing loans, when any response would be forced and of limited scope. the fact that the share of npls in the segment of housing loans did not increase, but rather decreased since the introduction of the measure, amounting to 1. 6 % in april, shows that the measure was more than effective. it is important to point out in this context that thanks to the banks'active efforts to manage npls, strategically supported by the serbian central bank and the government, we managed to keep the share of npls at a historical low. also, i would like to use this opportunity to emphasise that the first issue of long - term mrel bonds was realised, this being the first issue of mrel bonds in the western balkans. the mrel bonds were issued in dinars, which additionally contributes