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Monetarna politika | Strategija i ciljevi monetarne politike

Monetary Policy Objectives for 2003

In the course of 2002, the National Bank of Yugoslavia focused its efforts on bank restructuring and improvement of monetary instruments. The overall monetary policy results, the aim of which was to strike a proper balance between inflation and external objectives, were very impressive: inflation was lowered to 14,2% compared to December 2001, foreign exchange reserves of the National Bank of Yugoslavia rose rapidly, as did bank lending to both the economy and households which brought about stronger aggregate demand, which, in turn, triggered the overall economic activity, thus building on the competitiveness of the Serbian economy. It should also be noted that the in the course of 2002 the NBY lowered its annual discount rate to 9,5%, with a view to further decrease.

Growth of money supply (M1)¹  stemmed from two main sources: money creation through increased foreign exchange reserves and bank lending. Inflation, on the other hand, was fended off by increased real money demand and continued remonetarization. The growth of M1 aggregate went hand in hand with the growth of M2²  and M3³.

Stable national currency and economic environment lent support to the increased public confidence in the banking sector, so that in the course of the year 2002 both foreign currency and dinar deposits rose considerably. Positive effects of competition among banks brought about lowering of interest rates, improved quality of banking services and increased use of cashless means of payment.

It is expected that the year 2003 will see the developments continuing along the similar lines. Pursuant to the Decision on the Monetary Policy in 2003 , set as the principal goals for the current year are lowering inflation to 9% compared to December 31, 2002 while maintaining dinar stability and further growth of foreign exchange reserves held with the National Bank of Yugoslavia by an additional USD 330 million.

Throughout the year 2003, banks will be free to determine their own exchange rates both for foreign exchange and foreign currency cash based on the supply and demand principle prevailing on the market. It is expected that the interest rates of commercial banks will continue on their downward path, in line with the lowering of inflation and enhanced dinar exchange rate stability. The National Bank of Yugoslavia has created all necessary conditions for the smooth and unimpeded transfer of payment operations to commercial banks from January 1, 2003. Nevertheless, the National Bank of Yugoslavia will continue to regulate, monitor and supervise the dinar payment operations performed by banks.

For the purpose of maintaining macroeconomic stability, the National Bank of Yugoslavia will continue to intervene on the foreign exchange market i.e. to purchase and sell foreign exchange and foreign currency cash throughout the year. It is also expected that strengthened confidence in the national currency, along with the enhanced functioning of the fiscal system should bring about narrowing of gray economy channels. Also envisaged for the year 2003 is the continuation of efforts invested in the development of monetary instruments and domestic financial market.

¹  M1= money in circulation + transactional deposits
²  M2= M1 + dinar deposits
³  M3= M2 + foreign currency deposits