radovan jelasic : national bank of serbia – european integration challenges speech by mr radovan jelasic, governor of the national bank of serbia, at the promotion of the 4th issue of the regional magazine for eu integration and transition processes “ european integration challenges ”, belgrade, 13 may 2009. * * * ladies and gentlemen, allow me to welcome you on behalf of the national bank of serbia, and to extend my appreciation for the magazine “ european integration challenges ” whose very title points to the key challenges we shall be facing in the near future. today i would like to touch on three key issues : first, what does integration to the eu mean for the national bank from the point of view of concrete steps we have been taking so far ; second, what is an “ expensive ” credit in serbia versus europe, and finally, what measures has the nbs taken so far to lessen the effects of the crisis by drawing on the ample experience of eu countries. in drafting the law on the nbs, law on banks and many other legal regulations special attention is paid to their harmonization with eu regulations so as to create necessary preconditions for the integration of our country into the family of 27 eu member countries. to illustrate, we in serbia did not engage in long debates on why “ maintaining price stability ” should be the primary objective of the nbs instead of, for example, stability of the exchange rate which is so high on our everyday agenda and which, by the way, means „ fixed rate ” for many in serbia, or the maintenance of the stability in wages, gdp growth or some such other thing. the answer to this question is obvious enough. there is no alternative as that objective is stipulated by the acquis communautaire. the same applies to numerous other points of law relating to nbs operations which incorporate experiences gained in more advanced phases of development and which guarantees that our legislation will precede practice and enable us to learn from the experiences of others because many countries have been through these phases long before us. whether we shall actually join the eu does not depend on us, because adoption of the so called “ european legislation ” represents a necessary condition but in itself is not sufficient to guarantee our integration into the eu. allow me to illustrate this point by the following example : constitution of the republic of serbia and the law on the national bank of serbia do specify that the nbs is an independent institution. but here comes the main difference between theory

radovan jelasic : global compact, social responsibility and global financial crisis speech by mr radovan jelasic, governor of the national bank of serbia, at the regional conference on social responsibility in the chamber of commerce of serbia, belgrade, 4 november 2008. * * * the overwhelming interconnectedness of modern economy on the global scale has been positively confirmed over the last several weeks when the whole world was shaken by turbulences in international capital markets. their effects are evident across all continents and the bout of instability which ensued has again brought to the fore issues like confidence, transparency in private sector operations, the role of the state, profits and bonus payments, as well as the responsibility to educate financial services consumers. i am addressing you here today not only as the governor of the national bank, but also as a representative and a participant in the un global compact, an important initiative launched in serbia with the support of the undp almost a year to date. as you are certainly aware, this initiative promotes socially responsible behaviour, a notion of mounting significance in turbulent times such as these, the role of which shall no doubt grow in future. today, i wish to discuss briefly the effects of the events on the world financial market on serbia and the role of social responsibility within that context. confidence in the financial sector is particularly significant in serbia in view of its turbulent political and economic history. decline in economic activity in developed countries has three main features : 1. in general, people in the west tend to save more, and they save with banks. in serbia, however, there is a saying “ he who is bitten by a snake fears a lizard ” and, unfortunately, the volume of savings in serbia declined in october. however, by withdrawing their savings deposits from bank accounts citizens manage only to multiply the negative effects coming from abroad, and everybody involved stands to loose : citizens lose out on interest earnings, those needing money get smaller and more expensive loans and the state gets less in tax revenues as gdp declines! 2. decline in economic growth in western countries induces decline in inflation due to weaker demand. but in serbia we have often had stagflation, which means minimum / negative economic growth at increased growth in inflation, primarily induced by insufficiently developed market mechanisms, i. e. monopolies and oligopolies. 3. western governments offer sizeable amounts of money, i. e. implement expansionary fiscal policy. but in serbia, we implement expansionary fiscal