Jorgovanka Tabaković, Governor of the National Bank of Serbia

Serbia should continue to do what it has done over the past 12 years. Economically, it should maintain the macroeconomic and financial stability achieved and continue implementing structural reforms. Judging by economic growth forecasts and the gradual decline in inflation, turbulent times are behind us and new reform challenges lie ahead

National Bank of Serbia Governor Jorgovanka Tabaković says that Serbia has shown resilience to external shocks, maintained favourable macroeconomic prospects and managed to preserve macroeconomic stability, production capacities and human capital thanks to its responsible economic policy management both before and during this multidimensional global crisis. The most significant international institutions forecast one of the highest growth rates in Europe for Serbia this year.

“Our current GDP growth projection stands at 3.8%. The inflation trend also confirms that the periods of pronounced shocks, which caused disruptions in the international food and energy markets and heightened cost pressures globally, are behind us,” says Governor Tabaković. “According to our projection, inflation will continue to move within target band over the medium term, while its low and stable level will contribute to increased investment confidence and easier planning, higher employment and living standards for our citizens, as well as improved competitiveness.”

What do you see as being the key prerequisites for Serbia to maximise its benefits from the European Growth Plan for the Western Balkans?

— I believe that Serbia should continue to do what it has done over the past 12 years. Economically, it should maintain the macroeconomic and financial stability achieved and continue implementing structural reforms, thereby further strengthening its macroeconomic foundations and resilience to external shocks. As the largest economy in the region, Serbia certainly benefits from its further economic integration, as well as from closer ties with the EU.

Our current GDP growth projection for the year stands at 3.8%

Through a combination of reforms and investments, which form the basis of the entire growth plan for the Western Balkans, Serbia and other countries of the region should achieve benefits through a unified market, which would include the free movement of goods, services and workers. It is important to emphasise that Serbia already has projects prepared for these purposes, and there is room for other countries in the region to join in.

The NBS is one of the few institutions that continuously aligns its regulations with European standards. What practical benefits will the introduction of the open banking concept bring in terms of strengthening competition in the financial services sector?

— The introduction of the open banking concept aims to further stimulate market innovations and ensure greater competition and transparency in the provision of payment services. The basic premise of open banking is based on the sharing of data between banking and non-banking payment service providers, meaning that banks will be obliged to share a certain minimum amount of information about their clients’ accounts and transactions, with those clients’ explicit prior consent. New providers will be able to offer a wider range of payment and financial services based on client data, such as solutions for collecting information about accounts at different banks in one place, better oversight and control of personal finances, initiating payments via third-party applications without the need for cards, and other innovative services.

What are the NBS’s further plans regarding the continued digital transformation of the financial sector?

— Through our activities, we encourage innovations and create conditions for our citizens and businesses to experience the benefits of using modern technologies in financial services, but with the highest level of security, legal certainty and consumer protection. To make the benefits of developing new and existing services based on increasingly advanced and faster technology available to as many citizens as possible, various activities are underway, including the process of joining the Single Euro Payments Area (SEPA).

By joining SEPA, payment service providers in Serbia will be able to offer innovative, faster, more reliable and cheaper payment services. This primarily relates to payment transactions in euros within the SEPA area, such as regular payments or remittances, which will no longer be burdened with costs like correspondent banking services, while the processing times will be much shorter.

New financial services present a field for numerous innovations, but also raise security concerns. What is the NBS focused on in particular when it comes to strengthening transaction security for users, investors and the business community as a whole?

— Given that the creation and implementation of new, enhanced security rules and mechanisms take time, and that users of payment and financial services need protection now and immediately, the NBS recently sought to maximise the use of existing standards and institutions in this area to compensate the affected users and ensure that banks develop appropriate security mechanisms to prevent such abuses.

Serbia already has projects prepared related to the growth plan for the Western Balkans, and there is room for other countries in the region to join them

Thus, in supervisory procedures following up on user complaints, banks were ordered to introduce certain innovative technical solutions to improve user authentication. Simultaneously, the NBS, through amendments to the Law on Payment Services, has provided instruments intended to both raise the security level of digital payment services and ensure quick reimbursement for users in the case of abuse.

One interesting initiative mentioned at a recent FIC event on financial services is the implementation of the “green financing” concept in Serbia. What is the space for the intervention of the NBS, as the country’s central bank, in this domain?

— As a regulator and supervisor of banks, we monitor banks’ activities in terms of green lending and their exposure to climate-related risks, understanding the complexity and multifaceted nature of this concept that needs to be encouraged, while considering the characteristics of the domestic market, financing needs and opportunities available to market participants. Given that climate-related risks are a relatively new and quite complex concept, and that this concept is still being structured and systematised at the international level, we can say that the banking sector in Serbia currently responds satisfactorily to new trends regarding the risks to which banks are exposed.

You recently marked the 140th anniversary of the operations of the National Bank of Serbia. How will the last decade be recorded in the history of the central bank?

— Allow me to reflect on the past 12 years, as this is the period for which I can be accountable and for which I am responsible. In 2012, I promised to restore the reputation of the National Bank of Serbia to what it deserves. Every decision we made was guided by the need to maintain the stability of the system, as it is the foundation of the trust that is earned through it. Not with words, but with deeds. In Serbia, stability has become the new reality – I believe that the last 12 years will be recorded in the history of the central bank for this reason. Our citizens know how they lived before, anxiously watching exchange rate lists, and when inflation reduced the real value of their earnings. However, running a central bank is not a job you can ever say is finally done. As in life, so in monetary policy, there are no final victories.