The Role of the National Bank of Serbia In Reducing the Negative Effects of Financial Crisis in Serbia

Rapidly overflow crisis in Europe has in the short term to dramatically decrease the projection of economic growth; despite a significantly reduced liquidity is present and growing danger of inflation. Access to new sources of funds is almost out, which left negative consequences on the countries of Eastern and Southeast European countries, whose financial system is dominated by subsidiaries of large European banks. Effects of reduced inflow of capital, the depreciation pressure, increase the risk of deterioration of the quality of assets in countries in the region, whose products are mostly indexed in foreign currency. World financial crisis arrived in Serbia. It is now reflected in the reduced availability of funds from abroad and the psychological-induced fall in confidence in the banking system, that is, to some extent, resulted in withdrawal of foreign currency deposits. According to the two grounds there was a fall in foreign currency liquidity. This paper presents the role of central banks in the mitigation of systemic risk and the role of the National Bank of Serbia and measures undertaken to protect the national financial system and reduce the negative effects of financial crisis in Serbia.