NBS ready to approve about 70 billion RSD worth of loans

Governor of the National Bank of Serbia, Radovan Jelašić, said yesterday (May 13, 2009) that the central bank was ready to approve about 70 billion RSD worth of short-term loans to the banks, within the scope of measures for alleviation of the crisis, as well as additional 1 billion EUR through "swap" transactions. NBS will also reduce restrictivity of regulations that concern capital and mandatory reserves of banks.

- All these measures will enable maintenance of stability of banking sector - Jelašić said at the press conference occasioned by promotion of the fourth issue of regional magazine "Challenges of European Integrations" in the National Bank of Serbia, and he pointed out that the biggest challenge in Serbia and the region in next few months would be how to persuade banks to grant more loans.

Speaking about the newspaper edited by NBS, Jelašić said that it was based on the best European practice and added that, if the banks were ready to pledge part of their assets, NBS would approve short-term loans to them, with the interest rate of minimum 15.5% (referential interest rate of 14% increased by 1.5%), at the moment when inflation in April reached 10% against the same month in 2008.

When it comes to "swap" transactions in amount of 1 billion EUR, Jelašić explained that it was the exchange of deposits in one currency for deposits in other currency according to certain exchange rate.

Jelašić pointed out that the banking system in Serbia was solvent and liquid, that money existed, but that it was more expensive than in 2008, and he explained that the economic cirisis would have more negative impact on the countries in transition than on the developed countries, and that Serbia must pass through painfull process of adaptation.