Governor of the National Bank of Serbia (NBS) Dejan Soskic said Thursday that banks had enough money to finance the economy and it was not necessary to lower reserve requirements, particularly because there was no guarantee that the funds so released would go to crediting development projects.

During a session of the Assembly of the Serbian Chamber of Commerce (PKS), Soskic pointed out that there was enough money in banks' accounts, adding that the NBS had no right to tell banks to lend to enterprises, because the banks were free and market-oriented.

The governor also said that lowering reserve requirements on foreign sources of finance had sent a message to banks to continue funding themselves in a manner involving substantial risk, transferring the currency risk to end users, that is, to the economy and citizens.

He cautioned that a reduction in reserve requirements would lead to monetary expansion in a situation where inflation had already gone above the upper limit of the target range. Soskic said that the financial system was already liquid enough and did not need additional liquidity injection, adding that there were other mechanisms for financing development projects, such as the establishment of the development bank in Serbia, which should become operational in early 2012.

Soskic also announced that certain measures that the NBS planned to introduce in the future would allow lowering interest rates on loans and added that further relaxation of the reference interest rates in the future should not be surprising, because stronger inflationary pressures were not expected.