BELGRADE (Serbia), May 17 (SeeNews) – The European Union's Economic and Financial Affairs Council has recommended to Serbia to further extend the usage of the dinar currency in the country's banking system, Serbia's central bank said on Friday.
The measures undertaken by the authorities in the context of the Dinarisation Strategy are yielding good results and progress is visible notably on the deposit side, which is also paramount for faster progress on dinarisation on the loan side, the central bank, NBS, said in a statement following the regular Economic and Financial Dialogue between the EU and the Western Balkans and Turkey meeting in Brussels.
The Economic and Financial Affairs Council assessed the NBS' monetary policy as pursued adequately and consistently with the achievement of the inflation target in 2018, while the capitalisation of Serbia’s banking sector is high and liquidity is satisfactory.
"Serbia has also recorded a sharp fall in the non-performing loan (NPL) ratio. And another fact is that with our measures we have supported two-digit growth in corporate and household lending, and via this channel, we supported economic growth as well," NBS governor Jorgovanka Tabakovic said at the meeting.
The share of dinar-denominated loans extended by Serbian banks in the fourth quarter of 2018 fell to 33.8% of total loans, from 36.8% in the like period of the prior year, Serbia's central bank said in March.
In 2012, the Serbian government and NBS adopted a strategy for the "dinarisation" of the country's economy that aims to achieve a satisfactory level of the usage of the dinar in the financial system, in order to improve the country’s financial stability, lessen the risk of exchange rate volatility and reinforce the effectiveness of monetary policy.