Nonetheless, there are examples where we managed to soften this trade-off between sound risk management and procyclicality. One example is the new Capital Accord, Basle II, which requires banks to perform stress tests and demonstrate that they hold sufficient capital buffers above the regulatory minimum level when economic conditions are favourable.
There is no doubt however that this is also a result of Serbia’s better macroeconomic performances and lower risk premium, and hence lower cost of borrowing for both government and private sector.