The Evolution of Serbian Forex Through NBS FX Swaps

Branko Zivanovic () and Ana Jolovic
Additional contact information
Branko Zivanovic: Belgrade Banking Academy
Ana Jolovic: Maximaconsulting

Economic Analysis, 2012, vol. 45, issue 3-4, 14-30

Abstract: This paper emphasizes the main goals of using derivatives as a monetary tool, increasing the foreign currency liquidity of commercial banks and controlling the volatility of the national currency. Over the past few years, FX swaps, very often mistaken for currency swaps, became a popular monetary instrument among central banks. Since 2007, inter-central bank swap credit lines have become a role model for supporting the foreign currency liquidity of national commercial banks. The National Bank of Serbia introduced FX swap transactions as part of a special facility for supporting the country’s financial stability. Our research indicates that the NBS is not part of a swap credit line, but rather uses FX swaps internally and in a very fragmented manner. The trading volume of the newly-introduced instrument has been quite modest. The quiet introduction of FX swaps has failed to make any insignificant impact on the stabilization of the national currency, and has caused a fairly minor increase in EUR liquidity. At the very end it is worth mentioning that, regardless of the first results, NBS swaps mean that the Serbian forex derivative market has “crossed the Rubicon”.

Keywords: FX swap; monetary policy; central bank; FX currency liquidity; RSD volatility; National Bank of Serbia (search for similar items in EconPapers)
JEL-codes: D53 G28 (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.ien.bg.ac.rs/index.php/en/2012/2012-3-4 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ibg:eajour:v:45:y:2012:i:3-4:p:14-30

Access Statistics for this article

Economic Analysis is currently edited by Mirjana Radovic Markovic

More articles in Economic Analysis from Institute of Economic Sciences 12 Zmaj Jovina St, 11000 Belgrade, Serbia. Contact information at EDIRC.
Bibliographic data for series maintained by Zorica Bozic ().