NBS to focus attention on reducing inflation fluctuations

BELGRADE - The National Bank of Serbia (NBS) will endeavor to promote results in the area of price and financial stability, with a special focus on reducing volatility of the inflation rate and its stabilization at the target level, NBS Governor Jorgovanka Tabakovic stated on Thursday.

She said at a session of the Parliamentary Committee on Finance that with a view to financial stability the attention will be directed at solving the issue of doubtful loans and similar developments in the future.

"We expect the success of the NBS in realizing its legally defined goals will contribute to the implementation of fiscal consolidation measures and structural reforms," ??she said.

Tabakovic stated that this would, at the same time, create additional room for relaxation of monetary policy and that its contribution to the economic recovery will alleviate the expected repercussions of fiscal consolidation.

She pointed out that Serbia's financial system as a whole in 2013 was stable.

Maintaining the capitalization of the banking sector above the region's average resulted from both recapitalization and closing down of insolvent banks, she said.

She also stated that liquidity risk does not represent a threat to the financial stability of the system.

"Owing to the NBS conservative policy, namely high level of bank reserves for estimated losses, the increased share of doubtful loans did not endanger the banking system," she said.

Tabakovic said that in 2013 the NBS fully contributed to macroeconomic stabilization, noting that the inflation was reduced from 12.8 percent in January to 2.2 percent in December last year, adding that the financial system as a whole remained stable.

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