which stimulates production and discourages consumption – for instance, by raising the vat rate, while at the same time lowering wage taxes. on the side of expenditure, fiscal policy may contribute to the medium - term narrowing of the current account deficit by shifting the budget from transfers and consumption towards investments that target export - oriented and import - substituting sectors. the more effective the use of these two mechanisms, the lesser the need for adjustment through depreciation of the dinar. in fact, i am convinced that efficient structural measures aided by fiscal policy would be more than sufficient to fully eliminate our current account deficit, with no medium - term adjustment of the exchange rate whatsoever. fiscal balance while the composition of fiscal revenues and expenditures represents a potent tool for the reduction of external imbalances in serbia, the balance between fiscal revenues and expenditures represents another key factor for the assessment of credit rating and the country risk premium. recent fiscal problems experienced by some eurozone members, which contributed to the second wave of the crisis, have further heightened the significance of fiscal balance and public debt levels in the assessment of macroeconomic sustainability of many economies. bis central bankers ’ speeches though the share of public debt in gdp in serbia is lower than in many other european countries, it has reached the prudent limit of 45 % as laid down by the fiscal rule ( as defined by the law on the budget system ) and this created the need for valid fiscal consolidation. fiscal consolidation may induce a decline in demand in the short run, but has advantages in terms of improving economic activity and growth over the medium run. high fiscal deficit and growing public debt boost the country risk, which increases the cost of borrowing for the serbian state, corporates, banks and households alike, and discourages the inflow of foreign capital. together, this results in lower economic growth and lower living standard in the medium and long run. fiscal or monetary stimuli fiscal consolidation and implementation of a responsible fiscal policy would create more scope for the counter - cyclical impact of monetary policy, i. e. its capacity to support the economic recovery and contribute to faster recovery at a lower level of real interest rates. in the initial wave of the crisis many countries, including serbia, implemented expansionary fiscal policy to stimulate economic activity. but in this phase of the crisis relying on fiscal expansion would be rather risky due to the limited room for its financing and the fact that foreign investors, credit rating agencies and international financial institutions, such as the imf, are particularly

jorgovanka tabakovi : development of financial industry in the digital economy era address ( via video ) by dr jorgovanka tabakovi, governor of the national bank of serbia, at the opening ceremony of the 20th china international finance forum, 14 december 2023. * * * esteemed hosts, esteemed participants of the china international finance forum, it is a great honour to address you for again on behalf of the republic of serbia and the national bank of serbia, at the helm of which i have been for more than eleven years. dear friends, three years ago i said that it was not easy to speak about financial services in the digital economy era to you who are leaders in this area. but, it is not difficult either, because china is the type of leader who helps and encourages others to make progress as well. serbia is a good example of this, which is also reflected in the economic and financial cooperation underpinned by the mutual respect and friendship of the serbian president aleksandar vui and the chinese president xi jinping. in the past ten years, china has become serbia's important foreign trade partner. our cooperation has strengthened for an entire decade, ever since we signed the joint statement on deepening strategic partnership, making serbia the first country in central and east europe to set up strategic partnership with the people's republic of china. during this year's belt and road forum for international cooperation, we also signed 18 important agreements, of which the free trade agreement between our two countries is the most important one. china was the second - largest foreign investor in serbia in 2020 and 2021, and the largest foreign investor in 2022, with investments worth usd 1. 5 bn. thus, a third of the record - high fdis to serbia in 2022 came from china. trade in goods increased as much as 5. 4 times in the past ten years, with china becoming serbia's second most important trade partner in 2022. in january 2015, the national bank of serbia included the chinese yuan in the list of currencies traded in the serbian fx market. in 2021 and 2022 the chinese yuan was among the four top currencies traded between domestic banks and their clients in the serbian fx market, which is another important indicator of the strength of our economic and overall relations. with the people's bank of china, we concluded the memorandum of understanding on designating a clearing bank for chinese yuans in serbia, creating conditions