Relations with the European Union
Joining the European Union (EU) and its single market of goods, capital, services and people is a strategic priority of the Republic of Serbia.
EU accession process based on the Stabilisation and Association Agreement
On 29 April 2008, Serbia successfully completed the first stage in this process by signing the Stabilisation and Association Agreement (SAA) with the EU and the Interim Agreement, as its integral part. By formalising the years-long institutional cooperation with the EU, Serbia made a commitment to fulfil all obligations stated in the SAA within six years from its entry into force. The harmonisation of domestic legislation began on the day of signing the Agreement and gradually expanded to all elements of the EU acquis referred to in the Agreement.
The Republic of Serbia ratified the SAA on 9 September 2008 and the Interim Agreement, as its integral part, became effective on 1 February 2010.
The SAA between the European communities and their member states of the one part and the Republic of Serbia of the other part became effective on 1 September 2013. On the day the SAA came into effect, the implementation of the Interim Agreement ceased, but the deadlines running from the start of Interim Agreement application remained in force. At the same time, obligations from the SAA, though not incorporated in the Interim Agreement, became binding and the deadlines for their fulfilment began to run.
EU accession negotiation process
On 22 December 2009, Serbia applied for EU membership. The European Council granted candidate status to Serbia on 1 March 2012 based on the recommendation and the opinion of the European Commission of 12 October 2011.
EU requirements for prospective members are based on the conclusions of the 1993 Copenhagen European Summit. These conclusions, known as the Copenhagen Criteria, are as follows:
On 28 June 2013, the European Council decided to open accession negotiations with Serbia and the first Intergovernmental Conference was held on 21 January 2014. Prior to that, the Council of the European Union adopted a negotiation framework defining the methodology, principles and structure of negotiations. Following the formal opening of negotiations, the screening process commenced, i.e. analytical examination and assessment of the compliance of Serbia’s legislation with the acquis. It was successfully concluded on 24 March 2015 within 34 of 35 negotiating areas (Chapter 35 – Other Issues).
At ten Intergovernmental Conferences held up to now, Serbia opened seventeen and provisionally closed two chapters.
National documents in the process of European integration
With a view to facilitating preparations of the country, particularly those of public administration, to meet new challenges and obligations arising from the EU accession process, on 9 October 2008 the Government adopted the National Programme for the Integration of the Republic of Serbia into the EU (NPI) and set up the first coordination mechanism to monitor its implementation. The NPI was a comprehensive document based on which all government activities in the accession process were planned in the period 2008–2012.
Upon receiving the candidate status for EU membership and in anticipation of the opening of accession negotiations, the Serbian Government adopted on 28 February 2013 a new multiannual programme for harmonising domestic regulations with the EU acquis named the National Programme for the Adoption of the Acquis (NPAA), having replaced the NPI.
With the start of negotiations on membership and the entry into force of the SAA, the Government of the Republic of Serbia adopted the first revision of the NPAA on 31 July 2014. The second revision of the NPAA was adopted on 17 November 2016, at the stage of receiving screening reports, drafting action plans for meeting the criteria for opening negotiations in individual chapters as well as preparing negotiation positions, while the third revision of the NPAA was adopted on 1 March 2018 amid intensive preparation of documents within the process of negotiating, opening and provisional closing of some negotiation chapters.
Economic Reform Programme (ERP) – coordinated management of economic and fiscal policies
In order to help Western Balkan countries to address the difficulties caused by the global economic crisis and meet the economic criteria for membership, the European Commission proposed a new approach to enlargement policy in its Strategy for 2014-2015. Namely, inspired by the coordination of economic and fiscal policies between the EU member states and the European Commission within the European Semester, the European Commission introduced a new approach to enlargement policy, primarily because it has been shown that such coordinated management strengthened the economies of the member states. In order to prepare for this process, in the pre-accession period the Republic of Serbia, as a candidate country, drafts a document called the Economic Reform Programme (ERP). The ERP contains a medium-term macroeconomic and fiscal policy framework, with particular reference to the assessment of external sustainability and the main structural barriers to growth, as well as specific structural reforms that directly support the macro-fiscal policy framework, eliminate barriers to growth and increase the competitiveness of the national economy. Bearing in mind that ERP is a rolling programme, and that every year a new cycle of its preparation is being implemented, it keeps continuity in priorities to a certain extent. Namely, the selected priority structural reforms are consistent with those already defined in the national strategic documents, national and regional strategies, the key documents that the Republic of Serbia prepares in the process of accession to the European Union, as well as in the recommendations of the Economic and Financial Affairs Council (ECOFIN Council).
NBS role in the European integration process
A stable and developed banking and financial sector is one of the pillars of a market economy. Therefore, a reliable and efficient central bank that ensures macroeconomic stability is a strong support in the European integration process.
Since the beginning of Serbia’s accession to the European Union, the National Bank of Serbia is an active participant in all phases of the process, and the harmonisation of the legal and institutional framework with the EU criteria and standards is one of its priorities.
Given the importance and role of the central bank in the negotiation process, the participation of NBS representatives in Serbia’s coordinating structure for the EU accession process is envisaged in:
During negotiations on membership, the NBS carries out its activities within 11 Negotiating Groups covering the following areas of the acquis:
The NBS is the lead institution for some areas of the acquis, such as financial services and economic and monetary policy. This is in line with the functions and responsibilities of the central bank. It also plays a very important role in the free movement of capital as an institution of the second order of competence.
Following the screening process, at the second Intergovernmental Conference between the Republic of Serbia and the European Union on 14 December 2015, the first two negotiating chapters were opened, including Chapter 32 - Financial control, in which the National Bank of Serbia plays a very important role, in the part relating to the protection of the euro from counterfeiting. The protection of the euro from counterfeiting is also covered by Chapter 24, for which negotiations were opened at the third Intergovernmental Conference on 18 July 2016.
Chapter 6 - Company law was opened at the seventh Intergovernmental Conference on 11 December 2017, while Chapter 33 - Financial and budgetary provisions was opened at the eighth Conference held on 25 June 2018.
At the tenth Intergovernmental Conference held on 27 June 2019 in Brussels, Serbia opened negotiations on Chapter 9 – Financial services, which marks the opening of all negotiating chapters where the NBS is the lead institution in the process of Serbia’s accession to the EU.
Stabilisation and Association Agreement (SAA)
Parallel to the above activities, the NBS takes part in the work of bodies tasked with SAA implementation:
National documents, EU documents and ministerial dialogue on economic policy
The NBS takes an active role in preparing materials for:
The NBS participates in the annual ministerial dialogue on economic policy between the European Union, i.e. representatives of member states, the European Commission and the European Central Bank and representatives of the countries and central banks of the Western Balkans and Turkey within the Council of Economic and Financial Affairs of the European Union (ECOFIN).
In an effort to encourage cooperation and dialogue between regional central banks regarding economic governance in the European Union – a topic relevant for all candidate and potential candidate countries, in May 2015 the NBS organised international conference "Economic governance in Europe and the accession to the European Union: what is the role of central banks?". The conference was attended by governors and other high representatives of central banks of candidate and potential candidate countries, senior officials of the European Central Bank and the European Commission, representatives of Serbian state administration and other institutions and academia.
Maastricht criteria (convergence criteria)
Based on a comprehensive macroeconomic analysis of the euro area, the Treaty of Maastricht stipulates the criteria that EU member states must meet in order to enter the single currency monetary area (euro).
It is considered that the fulfilment of the convergence criteria and permanent maintenance of macroeconomic indicators at a determined level are the main preconditions for lasting stability and balanced economic development within the euro area. The criteria are binding for all potential euro area member states, with the exception of those countries that have already joined the single currency monetary zone, having already fulfilled the required criteria.
The convergence criteria have been set as follows:
Cooperation with the European Central Bank
In 2008, the NBS stepped up its cooperation with the European Central Bank (ECB) through implementation of different EU-funded projects.
The technical assistance project “Needs Analysis for the National Bank of Serbia” was implemented by the ECB from 1 September 2008 to 31 May 2009. Within the project, which involved 17 NCBs of the European System of Central Banks (ESCB), the regulatory and operational framework of NBS operations relative to ESCB standards was analysed in six different project areas. The Needs Analysis Report was the principal deliverable of the project, setting out expert recommendations for further improvement of NBS operations in areas where harmonisation is required to enable the NBS to join the ESCB.
Cooperation continued under the project “Strengthening of the Institutional Capacities of the National Bank of Serbia” from February 2011 until December 2013. The project was funded through the EU Instrument for Pre-Accession Assistance (IPA) and involved experts from the ECB and 21 NCBs. It covered 13 areas of NBS operations: financial sector supervision, legislative harmonisation, liberalisation of capital movements, FX reserve management, monetary operations, financial services consumer protection, support in the EU accession process, economic analysis and research, statistics, payment system, financial stability, accounting and financial reporting, information technology. Project deliverables in these areas were obtained in the form of strategies, internal policies and economic models that will allow the NBS to meet ESCB central banking standards, as well as the preparation of laws in which the EU’s regulatory framework has been incorporated. Successful project realisation enables the NBS to be better prepared for the accession to the ESCB once Serbia meets the criteria for EU membership.
The NBS continued a very successful cooperation with the ECB by signing a Memorandum of Understanding in the area of preventing money laundering and detecting counterfeit euro banknotes in Serbia on 14 July 2014. This was the first MoU between the ECB and the NBS since the beginning of accession negotiations for the membership of our country in the European Union.
The agreement was signed during the first high-level dialogue on topics of common interest between the NBS and the ECB, which has been held once a year ever since. The ECB has regular high-level dialogues with all central banks of candidate countries that have opened accession negotiations with the European Union.
Continuation of EU support through projects and other types of technical assistance
Bearing in mind that the meeting of numerous, complex and mutually related legal and economic criteria is expected after the opening of negotiations, the NBS is constantly strengthening its institutional and administrative capacities in order to successfully respond to the challenges arising from the future membership of the Republic of Serbia in the European Union. One of the channels through which this is accomplished is support through projects and technical assistance instruments financed from the EU funds.
The European Union provided significant support to the NBS through two projects of the German Agency for International Cooperation (Deutsche Gesellschaft für Internationale Zusammenarbeit – GIZ), as well as through the PLAC II and PLAC III projects (Policy and Legal Advice Centre), whose main objective is to provide assistance to the Republic of Serbia in the effective conduct of accession negotiations by improving the legislative framework.
During 2018, the implementation of the IPA project "Strengthening the Institutional Capacities of the National Bank of Serbia in the Process of Accession to the European Union" started in ten areas: financial stability, FX reserve management, liberalisation of capital movements, economic analysis and research, accounting and financial reporting, financial sector supervision, insurance and voluntary pension funds, financial services consumer protection, information technology and support in the EU accession process.
The project aims to continue strengthening the institutional and administrative capacities of the NBS through harmonisation of its functions and activities with the regulations of the European Union and international standards. It is implemented in cooperation with Twinning partners - the Bundesbank, the National Bank of Romania, the Croatian National Bank, the Croatian Financial Services Supervisory Agency and the German Agency for International Cooperation (GIZ).
The project is also a confirmation of the successful cooperation of the NBS with the European System of Central Banks (ESCB), since its realisation will contribute to harmonisation with the best practices and standards of central banking, in order to make the NBS better prepared for membership in the ESCB.
On 26 March 2019, the Bundesbank and the European Commission launched a two-year regional project “Programme for Strengthening the Capacities of the Central Banks of the Western Balkans as part of the Integration into the European System of Central Banks” with central banks and the banking supervisory bodies of candidates and potential candidates for accession to the EU being the final beneficiaries (Serbia, Albania, Bosnia and Herzegovina, Montenegro, Northern Macedonia and the so-called state of Kosovo, pursuant to United Nations Security Council Resolution 1244).
The aim of the programme is to further strengthen institutional capacities by improving the instruments for analysing and implementing measures, as well as to transfer the best international and European standards into national practices. The specific objective of this programme is to further improve harmonisation with EU regulations and standards and international standards, strengthen the functions of central banks and banking supervision systems, and further harmonise national legislation.
In cooperation with 17 national central banks and with the support of the European Central Bank, the Bundesbank will organise an intensive regional training programme on key issues of central banking and supervision, such as banking supervision, financial stability, consumer protection and financial inclusion, recovery and resolution, monetary policy, payment systems, statistics, compliance and European integration, governance, accounting and internal audit policies.