Articles 3 and 4 of the Law on the National Bank of Serbia (“RS Official Gazette”, Nos 72/2003, 55/2004, 44/2010, 76/2012 and 106/2012, 14/2015 and 40/2015 – Constitutional Court decision and 44/2018) mandate the National Bank of Serbia to contribute, without prejudice to its primary objective, to the maintenance and strengthening of the stability of the financial system, and to determine and implement measures and activities to that effect.
Financial stability means that the financial system – financial intermediaries, financial markets and financial infrastructures – is capable of ensuring efficient allocation of financial resources and fulfilling its key macroeconomic functions even if financial imbalances and shocks occur in the domestic and international environment.
Under conditions of financial stability, economic agents have confidence in the banking system and ready access to financial services, such as payments, lending, deposits and hedging.
The intensity of the financial crisis has highlighted the need for a systemic approach to the regulation and supervision of the financial sector. The crisis has taught us three important lessons: (а) the degree of development of the financial system has a by far greater impact on economic activity than thought earlier; (b) the costs of financial crisis are very high; (c) price stability does not guarantee financial stability.
As part of the financial stability measures and activities, the National Bank of Serbia undertakes regular and comprehensive analyses of macroeconomic environment and functioning of key financial institutions, markets and infrastructure; identifies risks that pose a threat to the stability of the financial system; identifies trends that may increase the vulnerability of the financial system; and launches debate on new regulatory initiatives and their potential effect on the financial system and the real sector of the economy. The National Bank acts both preventively and correctively by changing the financial regulatory framework. If necessary, the National Bank also manages the consequences of external shocks and other crisis situations, lessening potentially negative effects on financial stability.