Central bank has no plans to fix Swiss franc rate

Central bank has no plans to fix Swiss franc rate

BELGRADE -- The National Bank of Serbia (NBS) does not intend to introduce Swiss franc rate fix, NBS Governor Jorgovanka Tabakovic stated on Monday.

Such a move would cause "immeasurable losses to the banking sector," she said.

"The price will have to be paid by all citizens, either as loan users, or as tax payers, if you take from anyone in the market," Tabakovic said answering the questions of citizens, who have loans denominated in Swiss francs, wondering whether the Swiss franc rate will be pegged to the level prior to its recent sudden appreciation.

Tabakovic said that the banking sector should realize how serious the situation is because the increase in the number of non-performing loans does not sit well with anyone.

The central bank does not intend to interfere in the relation between the banks and clients, but it will use all available mechanisms to prevent the increase of bad loans.

The citizens who have taken out franc-denominated loans should not ask for a solution from the NBS, but rather at the counters in the bank where they raised the loans, Tabakovic underlined.

At this point, the banks can help citizens by acting on the earlier recommendation of the NBS to change the interest rates unilaterally, if they have not done that already, Tabakovic underlined.

"The franc-denominated loans predominantly use LIBOR as the reference interest rate, and banker knew that the interest rate will fall so they pegged it to a higher exchange rate. That was possible before the Law on the Protection of Users of Financial Services entered into force, as back then the banks could change interest rates unilaterally," Tabakovic said.

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