Bankarstvo (Jan 2014)
130 years of the National Bank of Serbia 1884-2014
Abstract
The National Bank of Serbia, one of the most important state institutions of the Republic of Serbia, celebrates its grand jubilee this year - 130 years since its establishment. As the 16th central bank in the world, it was funded by equity capital from domestic sources. The Bank started its operations on 2 July 1884 pursuant to the Law on the Privileged National Bank of the Kingdom of Serbia, adopted on 6 January 1883 and published in 'Novine Srpske' on 19 January of the same year. Prior to the adoption of this Law, the Serbian monetary system was regulated by the Law on Minting Silver Coins, enacted in 1873, which set up the dinar as the sole legal tender in Serbia. The role of the Bank was defined by the Law on the Privileged National Bank of the Kingdom of Serbia, enacted in 1883, and was as follows: 'In order to improve trade and crafts in the Kingdom of Serbia using cheap capital and well-designed credit, the Royal Government is empowered to establish the National Bank in accordance with the legal provisions of this Law.' The initial discount rate of the National Bank was low and stable at 5.5% and the Lombard rate amounted to 6.5%. In the years up to 1941 these rates were relatively stable and usually varied between 5.5-8% at the annual level. During World War I, the National Bank was evacuated to Marseilles, while holding a representative office in London during World War II. During the 130 years of its operation, the National Bank has been run by 28 governors, the first of which was Aleksa Spasić, and three of which served two terms in office. The National Bank changed its name several times to reflect the change in the name of the state and its organization, and operated in different economic, social and international environments, including times of war, trade, economic and financial sanctions, hyperinflation and different internal and international political circumstances. Nowadays the National Bank of Serbia is organized as a modern central bank pursuant to the objectives and principles applied in Europe and beyond. Its legal mandate is the implementation of monetary and foreign exchange policies with the objective of maintaining low and stable inflation and preserving financial stability in the Republic of Serbia.
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