Is There a Bankers' Lobby?

They are Mirko Piljak (Trgovacka banka), Ljubomir Mihajlovic (Komercijalna banka), Dragoljub Vukosavljevic (Union banka) and Slavko Drljevic (Hipotekarna banka from Podgorica). The Digest is carrying an interview with Nikola Stanic who was recently appointed National Bank of Yugoslavia (NBJ) vice governor. Before his new appointment, Stanic had organized the work of the team of experts who had drawn up the program for the reconstruction of the monetary system and the revival of Yugoslavia's economy.

NIkola Stanic, NBJ vice governor

The Spreading of Lies

VREME: You are our only collocutor who is not involved in commercial banking. Where do you think that the main danger for the dinar's stability lies?

NIKOLA STANIC: I find it incredible that so many people still don't understand the kind of danger we faced in January. The daily growth of inflation was close to 86%, and the monthly rate of inflation was over one billion percent. I won't repeat all the circumstances which were leading us towards a total catastrophe.

Good money, by definition, does not suit those who can survive only in conditions of a rampant inflation. Were the NBJ and the three governments prepared to start the process aimed at helping successful firms and at getting rid of incompetent ones?

I don't think that a stable dinar can be an obstacle to anyone. But, I can imagine that the state and various individuals can have other interests. If this were not the case then developed countries would not invest such efforts in preserving the stability of their currencies, a prerequisite for the successful expansion of economic subjects. There is no doubt that good money is the better option, and if the state so dictates, then it is reasonable to suppose that a large segment of the economy will find it in its interest to defend a stable currency, especially the successful part of the economy, for their good and that of all. Unfortunately this is not the general belief here at the moment. There are entire structures which want the program for the reconstruction of the dinar to fail, because they hope that something better will follow then.

It can be assumed that such views are the result of many years of postponing the use of healthy money, i.e., of the thesis that convertibility is the final act in the growth of a national economy. You said just now that healthy money is a prerequisite condition for recognizing who is successful and who is not...

Show me an example in the world history of hyperinflation, where a nation or country which have managed to wrench themselves from such a devastating quagmire, have later agreed to return to it. We have a great many structures here which want a comeback of hyperinflation. I have not found an answer to the question why? To overthrow the state? What would they overthrow? I have no answer to the mystery which motivates people to opt for disaster. It is within this context that many lies have been spread.

What in particular are you thinking of?

How do you interpret the fact that the devaluation of the dinar is announced every two-three days. What kind of a mind is it that constructs all this, using cliches such as "it has been learned", or "well informed sources claim," etc.

You have shown that a healthy dinar is possible under sanctions. Do you think that a revision of the banking system is possible under such conditions?

It is difficult to say if something like that could be brought to an end. Doubtless, the process of improvement can begin, naturally with a planned and an organized policy and well calculated moves. I underscore that the matter does not concern all banks, because only ten odd banks are responsible for three quarters of all the problems affecting the entire banking system. I assume that this is the reason banks are being criticized, including the thesis that there is a bankers' lobby opposed to a stable dinar. While in fact, the matter concerns objective problems which have piled up. Why should banks show solid balances if it is the practice to have a flexible state budget? Such difficulties lead to the problem of reducing interest rates to the desired level.

I don't think that the matter concerns an organized lobby aimed at destroying a stable dinar. There are real problems in the balances of some banks. This is more important than the uneconomical approach of some banks in their work, the number of employed... A stable dinar will put them all into order. You can see that some banks are introducing guaranteed wages, this is because they cannot make payments which are not based on income.

You are talking about a great turnabout, as if all that remains to be done is its technical realization. Is there an agreement with important political and social forces on the matter?

It would be nice if a general consensus existed already, but that is a somewhat Utopian view of society. All the subjects of a society have never had identical interests. I believe in an overlapping of interests, and this keeps changing, according to circumstances. Our program is conceived in such a way that it enables the reaching of a consensus while the process is underway.