. notwithstanding a sharp banking and balance - of - payments crisis early in the decade, inflation in chile averaged less than 20 percent in the 1980s, compared with rates of about 350 percent in argentina and 265 percent in brazil. the achievement of price stability in the 1990s after so many years of failed stabilization attempts, an observer in 1990 might have been forgiven for concluding that low and stable inflation would remain elusive in latin america. but during the subsequent decade, better economic analysis and better policies led to far - better outcomes on the inflation front, as i have already noted. what accounts for this remarkable change? worldviews tend to evolve slowly, and it is far too soon to claim that ideas and politics in latin america have changed fundamentally or irrevocably. nevertheless, during the past fifteen years or so, both the political elites and the broader public in the region have, for the most part, shown an increased willingness to abandon the failed economic models of earlier decades in favor of new approaches that emphasize improved fiscal discipline, the benefits of free trade and free markets, and the vital importance of building strong economic institutions. the visible success of more market - oriented development strategies, notably the examples of the " east asian tigers " and ( closer to home ) of chile, was not lost on latin american policymakers. in addition, to restructure external debts and restore access to international financial markets, countries necessarily faced outside pressure to improve their policies, both from multilateral institutions and from the discipline of market forces. the conquest of inflation in latin america is a particularly interesting case study of the beneficial effects of the new thinking, although, as we shall see, success came only through persistent experimentation. after the debacles of the late 1980s, the view that inflation - particularly very high inflation - carries significant economic costs became more widely accepted, supported by empirical analyses and accumulated experience ( khan and senhadji, 2001 ). in the early 1990s, consequently, many latin american countries attacked their inflation problems with a new energy. initially, a common tactic was to fix the exchange rate, in the hope that an exchange - rate peg might stabilize inflation expectations and help to " import " some necessary monetary discipline. the use of fixed exchange rates was reminiscent of the earlier heterodox programs, although in the more market - oriented programs of the 1990s, wage - price controls and similar restrictions were generally not employed. this approach enjoyed some early successes. for example, mexico maintained a pegged exchange rate from 1987

by a total of 9 pp, with a view to unlocking the credit potential of banks. lower costs of borrowing and the funds released as a result of reduced fx required reserves, together with a pick - up in economic activity, supported the recovery in lending activity in the second half of 2015, and we all know that lending is an important prerequisite for a sound financial system. there is no particular need to underscore that in euroised economies such as ours the relative stability of the exchange rate and increased use of the national currency are the cornerstone of financial stability. the implementation of the dinarisation strategy therefore remains one of our priorities. it is exactly in the area of macroeconomic stability, which represents the first and most important pillar of the strategy, that we have achieved significant results. household dinar savings are now around 3 times higher than at end - 2012. more than two - thirds of new household loans in 2015 were in dinars, while the figure is even higher this year ( over 70 % ). we are pleased to see that the results of the national bank of serbia – low inflation, relative stability of the exchange rate and the sharp fall in interest rates in the dinar market – have kickstarted the process of dinarisation. the committment and effectiveness of the national bank of serbia in maintaining financial stability is reflected also in easing the pressures from strong international turbulences and averting them from our financial market. you will allow me once again to step out of the time frame covered by the report presented today and to touch upon the present. this is a way to bis central bankers ’ speeches show that time has not stopped and that we are discussing and monitoring stability all the time, without limiting ourselves to the span of one year. after persistent pressures in the foreign exchange market late last year and in the first half of 2016, it took another huge shock, such as brexit, to clearly demonstrate to everyone the importance of the national bank of serbia, its commitment, role and contribution to stability. the national bank of serbia, with the huge support of the president of the government of the republic of serbia, took a proactive, efficient and impartial approach. the quality of our presence in the market improved, our interventions became more efficient, our communication with all market participants enhanced, as did our coordination with the government. international portfolio investors confident in the central bank and the government, that is confident in financial and political stability, show they are prepared to