Tradition of Central Banking

Following the liberation from the centuries-long period of the Ottoman domination in the Balkans in the nineteenth century, the re-established Serbian state embarked on setting up the cornerstones of the new cultural and state institutions, namely the National Library (1832), an institution offering higher education (1838), a precursor of the academy of sciences (1841), national museum and national theatre (1868).

Throughout this period of re-establishing national authorities, Serbia had no national legal tender and as many as 43 foreign currencies were in circulation.

What became actually apparent at this point was a need to put Serbia’s monetary and treasury affairs in order and establish a national bank. The year 1854 saw the publication of an article entitled ‘Current Monetary Crisis’ in the ‘Srpske novine’ newspaper in which the author called for establishment of such an institution. Nevertheless, thirty years passed until this initiative was realized. It was only in 1884 that the institution entitled the Privileged National Bank of the Kingdom of Serbia was founded.

This bank was organized on the model of the Belgian national bank, which was, at the time, viewed as a paragon of a modern banking institution. It had its Shareholders’ Committee, Principal Council, Governing Council, Supervisory Council, Discount Council, Bank’s Governor (the first Governor was Aleksa Spasic, previously Minister without the portfolio) and a Vice-Governor.

At first the National Bank of Serbia’s seat was located in downtown Belgrade, in Knez Mihajlova street, it was later moved to an even more presentable new building in Kralja Petra Street, which is still its head location. A well-known Viennese architect, Konstantin Jovanovic, son of Anastas Jovanovic, a majordomo at the Court of Prince Mihajlo Obrenovic, worked out the blueprint for the head office building. In 1890, when the National Bank of Serbia moved into the new building and in the same year the architect received a high state decoration for this monumental work in the neoclassic style which, in the words of Felix Kanic, “would be the pride and joy of any metropolis in the world”.

Following the World War I, when the part of South Slavs united into a single state, the law passed on January 26, 1920 envisaged the transformation of the National Bank of the Kingdom of Serbia into the National Bank of the Kingdom of Serbs, Croats and Slovenians. In its new form it assumed the role of a central bank for the whole territory of the newly formed state. However, this transformation called for a larger building so that the architect who designed the original project had to make for an extension the original structure (built between 1923 and 1925). The extension was most appropriately integrated into the older building to form a smoothly rounded up and integrated whole.

Although the bank was founded as a privileged holding institution, Bank’s operations were under constant control of the state. It was only after changes that befell the country in 1920 that the Bank was legally recognized as a principally lending institution. From the year 1931 on, the Bank’s primary responsibility focused of streamlining the national monetary policy and assuming direction of the lending policy.
In line with the new name and the extended territory of the country, the Bank changed its name into the Bank of the Kingdom of Yugoslavia with its core purpose to maintain the integrity and value of the national currency.

During World War II (Aril 1941 – October 1944) the Bank operated from its representative main office in London. In September 1946, the Bank was nationalized and operated under the name of National Bank of Yugoslavia.

Pursuant to Law on the Implementation of the Constitutional Charter of the State Union of Serbia and Montenegro effective as of February 4, 2003, the National Bank of Yugoslavia continues to operate as a government institution of the Republic of Serbia. Position, organization, scope of authority and functions of the National Bank of Serbia are regulated by the Law on the National Bank of Serbia, effective as of July 19, 2003.