Serbia’s banking sector is making gradual progress in expanding dinar-denominated financing, even as the government becomes more reliant on foreign-currency borrowing. The contrasting trends are reflected in the latest figures from the National Bank of Serbia (NBS), which show domestic-currency lending reaching a record share while the dinar component of public debt continues to decline.
The NBS’s quarterly dinarisation report, published, showed that the share of dinar-denominated loans and other placements to businesses and households rose by one percentage point in the second quarter of 2026, reaching 40.7%. By contrast, the proportion of public debt denominated in dinars fell for the fourth consecutive quarter. At the end of June, dinar-denominated liabilities represented 20.9% of public debt, down from 21.1% at the end of March and 22.5% a year earlier. Foreign-currency public debt increased by approximately €1.6 billion between April and June, largely due to Serbia’s eurobond issuance on international capital markets.
The divergence highlights the different financing patterns of the banking sector and the government, with domestic lending gradually becoming less exposed to currency fluctuations while sovereign borrowing remains heavily dependent on foreign currencies.
Household Lending Outpaces Corporate Dinar Financing
The overall increase in dinarisation masks a substantial difference between household and corporate borrowing. Dinar-denominated placements accounted for 56.9% of household financing, compared with just 24.2% of placements to businesses. Consequently, approximately three-quarters of outstanding corporate placements remain denominated in or indexed to foreign currencies. This structure presents different levels of exposure depending on borrowers’ revenue sources. Exporters earning euros may naturally offset their foreign-currency liabilities, while businesses receiving predominantly dinar revenues face exchange-rate risks when servicing euro-linked debt.
The exposure is particularly relevant to construction companies, commercial property developers, industrial manufacturers and infrastructure operators, which often require substantial long-term financing. Total bank placements to businesses and households increased by RSD 175.1 billion (€1.49 billion) during the second quarter. Household placements accounted for RSD 95.2 billion of that increase.
The NBS also reported that the interest-rate differential between newly issued dinar loans and foreign-currency loans narrowed to 2.9 percentage points, among the lowest levels recorded. A smaller difference in borrowing costs could improve the relative attractiveness of dinar financing for companies seeking to reduce their currency exposure. Nevertheless, euro-denominated credit remains an important source of financing from both international lenders and domestic banks, particularly for large industrial and infrastructure projects.
Dinar Savings Expand Alongside Record Euro Deposits
Changes in the composition of bank deposits are also supporting the gradual expansion of domestic-currency financing. At the end of June, dinar deposits represented 45.5% of total business and household deposits, an increase of 0.5 percentage points during the second quarter. The share of deposits held in dinars was considerably higher among companies, reaching 60.7%, while household deposits recorded a dinar share of 35.5%.
Household savings denominated in the national currency climbed to a record RSD 230.3 billion (€1.96 billion), representing a 17.7% increase year-on-year. Foreign-currency household savings also reached a record, totalling €16.9 billion. The simultaneous growth of dinar and foreign-currency savings illustrates the continued importance of both currencies in Serbia’s financial system. For banks, a larger domestic-currency deposit base provides additional scope to expand dinar lending without creating currency mismatches between assets and liabilities.
The challenge is to channel that funding into longer-term credit for investment projects, alongside financing for household consumption and companies’ shorter-term operational requirements.
Foreign-Currency Liabilities Dominate Government Debt
Public borrowing remains substantially more exposed to international currency movements than domestic bank lending. Serbia’s total public debt stood at RSD 4.85 trillion, or approximately €41.3 billion, at the end of June, equivalent to 43.8% of estimated GDP. Foreign-currency liabilities accounted for approximately 79.1% of the total, while euro-denominated debt alone represented 62.4%.
The increase in foreign-currency borrowing reflects international bond issuance and financing associated with government investment programmes. The debt structure leaves public finances exposed to refinancing requirements, changes in international borrowing costs and currency valuation movements. A relatively stable exchange rate has helped contain currency risk, but it does not eliminate the potential effects of exchange-rate changes or higher financing costs in international markets.
Serbia’s infrastructure investment programme, covering transport, energy and projects related to Expo 2027, adds to the government’s financing requirements. Maintaining access to external capital while broadening the domestic investor base for longer-maturity dinar securities remains an important consideration for public debt management.
Dinar Government Bond Turnover Rises 131%
Trading activity in Serbia’s dinar-denominated government securities strengthened during the second quarter. Secondary-market turnover increased by 131% quarter-on-quarter to RSD 89.7 billion (€764 million). Despite the rise in trading volumes, activity remained concentrated in securities maturing in 2030, which accounted for approximately 72% of total turnover. The concentration indicates that liquidity is unevenly distributed across the domestic sovereign bond market.
Transactions on the Belgrade Stock Exchange represented only 1.4% of secondary-market turnover, with the majority of trading taking place outside the exchange. A deeper domestic government bond market could give pension funds, insurers and other institutional investors more opportunities to diversify their portfolios and establish more reliable pricing benchmarks. Greater market depth could also support banks in developing longer-term dinar financing products for corporate investment.
The latest NBS figures show progress in the use of the national currency across household lending, deposits and parts of the domestic financial market, while government borrowing remains predominantly foreign-currency based. Corporate lending and sovereign securities continue to account for areas where dinar financing has yet to achieve a comparable position.
