25/11/2020
NBS Governor Jorgovanka Tabaković and her associates participated today in the annual bilateral high-level policy dialogue with the European Central Bank (ECB). On behalf of the ECB, the dialogue was led by Fabio Panetta, member of the ECB Executive Board in charge of international and European relations, market operations and payment system supervision.
During this year’s dialogue special attention was devoted to digitalization and innovation. The representatives of both institutions discussed recent macroeconomic developments, monetary policies and financial system trends, as well as measures taken to mitigate the negative effects of the COVID-19 pandemic.
The NBS presented all the advantages of the NBS IPS system it operates. Launched on 22 October 2018 as the first instant payment system in the Balkans, the NBS IPS system enables the users to make transfers at any time of the day, 365 days of the year, via standard channels for initiating transactions (bank counters, m- and e-banking applications), to pay bills by scanning the NBS IPS QR code on issuer bills via m-banking, and to make instant payments at brick-and-mortar and internet points-of-sale. On 16 November, the NBS enabled all interested bill issuers (e.g. public utility companies) to generate or validate the NBS IPS QR code via a dedicated page. The NBS will continue to work on further improvements to the payment system in the Republic of Serbia and on the development of functionalities of the NBS IPS system. Very soon, in cooperation with system participants, it will enable a DeepLink оption for instant payments on internet points-of-sale, and in March 2021 the option of money transfer based only on the recipient’s mobile phone number.
“I am pleased that today we have discussed innovation with you, as this shows how much we, as the regulatory authority, but also as a catalyst to change, have done. For more than half a decade our strategic commitment has been to modernise and upgrade Serbia’s payment system. We implemented significant reforms and numerous activities, so that our businesses and households could access modern financial services and perform transactions in a safe, but at the same time easier and cheaper way. The current crisis caused by the COVID-19 pandemic has only strengthened the awareness that new technologies and more efficient business processes are always necessary and welcome in all spheres of modern banking”, said Governor Tabaković.
The second part of the dialogue was devoted to the macroeconomic impact of the COVID-19 pandemic and the measures taken to preserve economies.
The ECB representatives were familiarised with the fact that since the onset of the crisis the NBS has responded in a proactive and adequate fashion, by implementing a number of monetary measures and instruments which enabled fast and efficient supply of the banking and corporate sectors with needed cheap liquidity. It was particularly highlighted that Serbia faced this crisis well-prepared, with a stronger economy and more than an adequate level of FX reserves which have been reinforced by the NBS over the past years for the purpose, among other things, of situations such as the current one. A focus was also placed on the positive effects of the measures undertaken to facilitate the position of debtors, and on the results of the moratorium on the repayment of loans. The preserved high capitalisation and liquidity of the banking sector, the lowest level of NPLs on record, and continued two-digit lending growth – are the confirmation of the preserved stability and capacity of the Serbian banking sector to rise to all the challenges in the current extraordinary circumstances, while at the same time ensuring favourable financing conditions for corporates and households.
”We all responded in accordance with our economies' structures and our monetary and fiscal room. In Serbia we adopted numerous measures to preserve liquidity, favourable financing conditions, production capacities and jobs. We were able to respond with a package of measures worth 12.5% of GDP, owing to the full economic turnabout we made in the past eight years. In that period Serbia managed to achieve and preserve full macroeconomic, financial and fiscal stability, which, along with political stability, was a necessary precondition for our economic policy response. This is why at today's dialogue we can say that after we recorded the average GDP growth rates of 4.3% in the past two years, in this crisis year we precluded a sharper decline in GDP, and we expect full recovery already next year”, said the Governor.
“We have preserved our economy, employment has increased, inflation is low and stable – at around 1.6% on average, and is under the NBS’s control. Despite the great uncertainties and the periods of considerable volatility of the key parameters in the global markets, we have preserved the exchange rate of the dinar against the euro at a stable level. Complete economic recovery is unfolding with the support calibrated without prejudice to price and financial stability. Investment is recovering faster than anticipated, owing to the implementation of infrastructure projects which was not halted even in the second quarter, and owing to the preserved favourable financing conditions. The Government is committed to implementing the investment planned before the pandemic, as well as additional investment, which contributes to the rise in the production potential. The recovery of industry and some service sectors is also faster than forecast, and our agricultural season has also turned out to be better. Had we not responded swiftly and with a robust package of measures, the recovery of our economy would be much slower in 2021 and the following years due to the loss of production capacities and human potential. We did respond, and our timely and adequate economic support to the domestic corporate sector helped our economy to start to recover very quickly, already in May. Until September, all our economic indicators were at their pre-crisis levels. However, the new containment measures from October and November in numerous countries that are our main trade partners signal increased caution of policy makers and the potential need for new measures. Given our strong trade links with the EU market, the speed of recovery of the euro area is exceptionally important for us as well. We will continue working as so far, justifying the confidence of our citizens and businesses that the stable operating conditions will be preserved in Serbia”, concluded Governor Tabaković.
Today's meeting follows in the long-lasting tradition of good relations between the NBS and the ECB. The first bilateral dialogue was held on 14 July 2014 in Frankfurt, when, on the sidelines of the event, then ECB President Mario Draghi and NBS Governor Jorgovanka Tabaković signed the Cooperation Agreement for the prevention and detection of counterfeit euro banknotes in Serbia. Intensive bilateral dialogues are held once a year in Frankfurt or Belgrade.
Governor’s Office
