jorgovanka tabakovic : the best investment in the future is investment in people, cooperation, and diversification speech by dr jorgovanka tabakovic, governor of the national bank of serbia, at the second banking summit, belgrade, 5 december 2024. * * * esteemed ladies and gentlemen, dear hosts, dear colleagues and most of all – dear friends, this gathering is a meeting and conversation between friends, and i always follow the basic idea to " be a friend to a friend. " and what i can wish for the banking systems and sectors of the countries in the region is that they cooperate with their regulator and supervisor – in our case the two are under one roof, but elsewhere they are separated – and have the kind of cooperation that we have in serbia, and which resulted in the fact that we are organising this summit for the second year, and i truly expect it to become a tradition. that we do not see it only as a duty to meet, but to truly rejoice at seeing each other and that our meetings bring an even greater closeness which implies an open discussion about problems and solving them together, because as one of the members of the board of directors, when preparing this summit, modestly said : " yes, the banking sector is the most orderly system in serbia. " some of the journalists say provocatively : " and how do you protect the banking sector by favouring it? " my answer was that from 2012 until recently, banks returned more than eur 120 million directly to clients on account of the inherited rules of applying different exchange rates to loan approval and repayment, unilateral collection of certain charges... so you can see how favourably the governor of the national bank of serbia behaves towards the banks and how much this costs them. since october, i have been in the habit of opening addresses such as this one with a congratulatory message to serbian citizens on the investment grade credit rating, which our country deserved a long time ago! and everything we will talk about today is a part of our historic success! at the first banking summit, i wished that this gathering of ours would become a tradition! two years does not make a tradition yet – but it is a step in that direction. however, 103 years is a tradition and i congratulate the association of serbian banks on the 103rd anniversary, which you marked yesterday. where are we compared to the period a year ago? inflation has

closely co - moved with the exchange rate since the beginning of the crisis. more generally, however, spillovers seem to be asymmetric, with significant impact of the fed abroad, but not the other way round. for japan and the uk, the smaller size of these operations may be one explanatory factor. 8 at the very least, therefore, unconventional policies had marked effects on exchange rates. in the eurozone, the impact was in the opposite direction than in economies which implemented qe. currency depreciations of large economies, in turn, clearly recall thoughts about beggar - thy - neighbor policies9 and procyclical waves of capital flows going abroad. 10 this leads me to discuss the impact of unconventional policies on emerging economies. it has been widely acknowledged that the low returns on assets in the developed world have substantially increased capital inflows to emerging economies, which offer higher yields. for example, a substantial increase of non - financial corporate debt was observed. 11 equity prices went up and sovereign yields subsided. 12 the side effect of this demand was real appreciation of these currencies. in fact, the international spillovers of fed ’ s qe seem to affect emerging economies more strongly than advanced ones, or even for the us itself. 13 the implications of currency depreciation in one country may theoretically have some positive effects as well. in an integrated world negative demand shocks spill over and can create a liquidity trap in both countries. 14 the solution to escape it is to inflate the economy. done in isolation, this leads to currency depreciation and beggar - thy - neighbor effects. but if both countries inflate, then depreciations cancel out and both economies can get out from the trap. appreciation may be a problem for a small open economy facing its own zero lower bound, because the bound makes its own monetary policy less effective. 15 but if the goods that the economy produces are complements of those produced in the u. s. ( think of commodities used as input in production ), the net effects might be positive. tapering since september 2012, the fed has been purchasing mbs and treasuries at 85 bln per month. in may 2013 it announced a gradual unwinding of qe3, which was then put off / postponed in september. eventually, the tapering started in january 2014, and it is currently 45 bln usd per month. rogers j., scotti ch