Serbia continued to increase the use of its domestic currency across lending, savings and deposits, although foreign-currency financing remains a significant part of the financial system. The gradual rise in dinar-denominated financial activity has strengthened the role of domestic monetary policy while reducing exposure to exchange-rate risk for part of the economy.
Historically, widespread use of the euro in borrowing and savings has limited the effectiveness of the National Bank of Serbia (NBS) in transmitting monetary policy through changes in dinar interest rates. Borrowers earning income in dinars have also remained exposed to exchange-rate movements when taking loans denominated in or indexed to foreign currencies.
Household Lending Shows Higher Dinar Share
The composition of household lending continued to shift toward the domestic currency. The share of dinar loans in total household lending increased from 35.1% in 2012 to 56.8% in May 2026. As a result, the combined dinar share of lending to households and companies reached a record 40.3%, representing an increase of 12.3 percentage points compared with the end of 2012.
Savings and Deposits Continue Moving Toward Domestic Currency
Deposit trends also reflected increased use of the dinar. Dinar savings grew by almost 8% during 2025, followed by an additional increase of RSD 24 billion in the first six months of 2026, bringing total dinar savings to RSD 230.1 billion. Among corporate customers, dinar deposits accounted for 60.7% of total deposits. The overall dinarization rate for combined household and corporate deposits reached 45.3% in May 2026.
The domestic currency also represented approximately 20.3% of Serbia’s public debt. Although this share remained below the corresponding levels recorded in private-sector lending and deposits, the continued development of longer-term dinar-denominated government securities contributes to establishing domestic benchmark yields and supports broader use of dinar financial instruments.
Monetary Policy Benefits From Greater Dinar Use
A larger share of financing in the domestic currency improves the transmission of NBS monetary policy decisions by increasing the influence of dinar interest rates on financial conditions. Higher dinar funding also reduces banks’ reliance on foreign-currency liabilities, expands opportunities for savers to hold domestic-currency assets and lowers the financial system’s sensitivity to changes in external funding conditions.
Foreign-Currency Lending Remains Significant
Despite continued progress, the transition remains incomplete. With the dinar accounting for 40.3% of total lending to households and companies, nearly 60% of credit continues to be denominated in or indexed to foreign currencies. Long-term housing loans and corporate investment financing remain particularly difficult to shift toward dinar products because borrowers often compare the lower initial interest rates available on euro-linked loans with the higher rates offered on dinar financing.
Stable exchange-rate conditions can also reduce the incentive to switch to domestic-currency borrowing by lowering the perceived risk associated with foreign-currency loans, even though contractual exchange-rate exposure remains. Further expansion of dinarization will depend on continued confidence in low inflation, the development of longer-term domestic-currency funding markets and a broader availability of fixed-rate dinar financial products.
